Obama is calling for the extension of the Bush Tax Cut, but only for those with incomes below $250,000 and of course the Republicans are saying that the tax cuts should be extended for everyone--including millionaires and billionaires--or no one at all.
This is the typical Republican position and it should be noted that they care little about people earning the threshold $250k; their real interest is in protecting the super wealthy. They made this clear a million times and I don't think anyone but the timid Democrats in the Senate really believe them when they try to pull this bullshit "all-inclusive" stance. It's all about protecting the rich and that's it.
As an MMT adherent I am fully aware that taxes don't fund spending and that they only serve to regulate demand yada, yada, yada, and I am also aware that with a large output gap, raising taxes on anyone just works to sustain that output gap so long as that "revenue" is not recycled back as government spending in some form.
However, as a matter of equality and PRINCIPAL I think it's about time somebody other than the poor and middle class see their taxes go up. That's right, I said the poor and middle class have had their taxes increased--BIG TIME!
It's time we all begin to learn a fundamental lesson, that spending cuts are the fiscal equivalent of tax increases and the bulk of the spending cuts (tax increases) over the past several years have been targeted at the middle class and poor.
Whether you are talking about cuts in education, Medicare and Medicaid, food and nutrition, Veterans benefits, social programs, public safety (fire, police), you name it...there has been an unrelenting and rising stream of tax increases aimed at middle and lower income people. All the while, the rich have been getting tax break after tax break along with a larger share of national income and wealth. Like Warren Buffet said, it's outright class warfare and it's HIS class that is winning.
Nor should you buy the bogus argument that the rich are the "job creators" or "wealth creators." That's just a completely hollow and ridiculous claim and one that we've debunked here numerous times (here, here, here). The fact is, a vast portion of the income of the wealthy comes from extracting wealth from assets...assets that they did not create. Gordon Gekko said it right, when he said "I create nothing. I own." And he said that 25 years ago!
The rich don't educate our kids, keep our streets safe, protect property from fire and damage, fix roads and bridges, heal or care for the sick and infirm, stock store shelves or perform any of the other myriad types of work that essential in a modern, smooth-functioning society.
And while $250k may not be a lot to some people, those who do earn at that level or above are also not performing the tasks I mentioned above. Moreover, many of them are politically favorable to the "pro-spending-cut" menatality, which as I said is the same thing as calling for a tax, except it's not a tax on them, but on poor people.
Well, it's time for these folks to get fiscally "educated" or feel some pain, too! Obama should stick to his guns this time. He should stand fast on the call for higher taxes on $250k or more. People need to learn a lesson. The stakes are too high. We cannot have a greater and greater percentage of national wealth stripped away from the very people who built it, maintain it, and paid for it. It's outright theft. So be it if the economy crashes (and it won't, expect maybe for high end real estate brokers). Maybe out of the ashes we have a chance to build something better.
172 comments:
This is a flat out ridiculous post. This is easily your worst yet.
Cullen Roche was right. MMT's claim that it is apolitical and non-ideological is 100% BULLSHIT. You favour so-called "equality" over getting out of the quagmire the US is in at the moment?
What ever happened to,"I just look at the data, I don't let my ideology influence my analysis" Mike?
"...regulate demand yada yada yada...However, as a matter of EQUALITY [emphasis mine] and principal..."
Is this not an example of putting ideology before data?
It's absolutely nonsensical to suggest that Republicans don't care about people at the threshhold of $250K. How many times does it need to be repeated for you that many small business owners files as individuals so this tax hike will be affecting them too.
It's also known that the very wealthy are almost exclusively liberals.
"People need to be taught a lesson." This comment couldn't be more nakedly political.
Yes, I know your legions of fanatical progressive minions will be railing on repeating the same thing as you. It won't change the fact that most of what you've just said is 100% MOOSE PISS.
Good post Mike.
Some random thoughts:
I'm wondering if choosing 250k was a wise amount for where to draw the line. Fox News does an incredible job at framing the debate, and I think they've successfully made 250k sound like "small businesses" …and we Americans have a sensitivity toward small businesses. The idea of small business just FEELS American, ma and pa, your local plumber, etc.
Even though the majority of small business probably do not make 250k a year, it still feels/sounds like that's who's being targeted.
I'm not sure where we should be drawing the line, or how we should re-framing the issue, but the progressives are definitely losing this struggle.
Sam,
Do you really think most small businesses make a profit of 250k or greater?
Sam,
Other than raising taxes on the rich, is there any possible way to stem the natural upward flow of financial wealth?
If left as is eventually the 99% would have zero wealth. Does that make for a healthy economy?
Warren says let 'em save if they want to. It means taxes can be that much lower for us.
I never said I was apolitical. I have political views. I actually believe that the reason MMT has not made any inroads, is because it is impossible to meld it with political ideology of any kind.
I support the tax increases for the same social justice and equality reason, Mike. Well said. but we need to make sure that revenues being sucked out through taxes are offset by new spending.
The problem here is that this is still being sold by Obama as a deficit reduction tactic.
In addition, most small business people ($250k by your def) that I have spoken to SUPPORT gov't spending cuts, which are essentially taxes on the poor. So I say, too bad for the $250k. They're ideologues and ignorant and they are conducting class warfare. Let 'em pay like the rest.
Let's look at the realistic options:
-- do nothing, Bush tax cuts automatically expire. Leads to double dip recession.
-- Congress passes extension of Bush tax cuts. If Obama refuses to sign, there will be a double dip recession.
-- there is zero chance that the GOP House will pass Obama's proposal.
If I were Prez, I would instruct the Fed to levy a stiff financial transaction fee. Beowolf has pointed out that the Fed already has the authority to assess fees, no Congressional approval required. When conservatives scream bloody murder, I'd say "I'll consider REDUCING -- not eliminating -- the FTT if you pass my tax bill that eliminates FICA and increases taxes on the rich."
Dunno if the GOP would go for it, but at least the Prez would have some leverage. Right now he's got NOTHING.
Sam, there is no such thing as value-free economics, and that includes MMR, which is based on conservative, libertarian values, only they won't admit it.
You want to give the same punishment to hard-working Americans, who are only ignorant because spending cuts is a mainstream view and spending increases aren't, as the one that would be given to the economic rentiers and parasites on Wall Street.
If that isn't class warfare I don't what is. Screwing the middle-class because they don't know that the game is rigged. It seems that the real neo-liberals, the real ultra-right are the self-proclaimed "progressives". Tar the ultra-rich and the so-called "rich" with the same brush and CRUSH them, only you'll be crushing that same middle-class you claim to defend and giving a slap on the wrist to the ultra-wealthy progressive liberal elite.
BTW, those poor people get tax credits from the government to supplement their income, so to say that they're getting tax hikes is beyond stretching.
Also, one of MMT's central three tenets is a Job Guarantee, a New Deal 2.0. Sorry, but cannot escape from it, that is ideological
At present we need lower taxes, not higher taxes. So Obama is fighting the wrong battle here. In the long run we might want to change the distribution of wealth to give everyone a chance, but this is a long term problem. Immediate problem is an AD shortfall and we need LOWER taxes.
Democrats are stupid to be for "fiscal responsibility". Unfortunately they are serious about it (unlike GOP) and they end up hurting the economy.
"At present we need lower taxes"
At present we need lower taxes on workers.
Taxing wealth accumulators should have no negative effect on spending, since accumulation is "not spending".
Pete,
"So Obama is fighting the wrong battle here."
That's what happens when Gene Sperling is your economic consigliere.... rsp,
Here could be a wining message for either candidate:
"As president I'm going to not only extend all the Bush tax cuts, but I'm also going to lower taxes further on everyone making less than 250k."
Though, that would require 1) explaining that increasing the budget deficit is desirable right now, or 2) reducing government spending to "pay for it" (anti-stimulus).
As a fairly liberal/progressive person, I worry about the crazy tea party rightwing and who Romney would represent once he's President. But I'm coming around to the idea that Romney might be able to pass more stimulus than Obama, i.e. create a faster and deeper recovery.
Obama feels kind of like a wolf in sheep's clothing. Or at least he's lacks the courage to fight for what he says he believes in. And who really knows what Romney believes in?
Terrible.
"As president I'm going to not only extend all the Bush tax cuts, but I'm also going to lower taxes further on everyone making less than 250k."
Right. Why not say, "We're going to get rid of the payroll tax now and forever and fund Social Security out of general revenue."
The higher taxes in the rich are offset with lower taxes on everyone else.
JK,
I get the idea that somehow the Peterson people have made serious inroads into Democratic party politics, in fact it looks like the Peterson people may have abandoned the GOP for the most part (David Walker actually sued Dick Cheney). Although the GOP is still doing just fine in the debt-moron department even without much if any Peterson prodding...
It may be that now the Democrats are actually the "go to" party of the Peterson people and the Obama admin seems are happy to oblige them at all turns...
rsp,
JK, Obama was the Wall Street candidate and IS the Wall Street President. Supported by the RICH, President FOR the RICH.
Only a Democratic President, could deceive so many moronic Americans into thinking that he was post-partisan and in convincing them to vote for him.
Only a Democratic President could get away with making drastic cuts into Medicare and Social Security. If a Republican President ever did that, his constituency who give him a lynching.
Dan, you are being delusional. MMR strips all the progressive ideology out of MMT. If it is conservative, then it means that MMT has some conservative ideology too.
"Only a Democratic President could get away with making drastic cuts into Medicare and Social Security…"
This I agree with - that's what make what's happening so sad.
"MMR strips all the progressive ideology out of MMT…"
First, what's wrong with progressive ideas?
Second, MMT is merely a framework based on system principles (sectoral balances, closed-system arithmetic and stock-flow consistency) that is pretty non-ideological.
How can arithmetic be ideological?
The JG is nothing more than an automatic stabilizer that in a system dynamic is designed to maintain both price stability and full employment.
There are other ways to achieve this, but the JG doesn't make the MMT framework ideological.
How can the dual goals of full employment and price stability be maintained?
Objections to these things seems ideological to me.
I don't care about more MMT vs. MMR melodrama Sam.
I have never tried to avoid political agendas. I think people have a fairly good idea by now about by political values, since I wear most of them on my sleeve. They can see where they do and where they don't differ from others who associate themselves with MMT thinking. I favor more democracy, more equality, genuine full employment, corporate governance reform, financial system reform and an activist government spearheading significant public investment in our future.
It is no selling point for me that a school of economic thought is "non-ideological" or value free. If a school of thought is not useful in advancing certain values and building a better world - which is an inherently political task - then what the hell good is it?
All kinds of mainstream macroeconomists are constantly trying to pawn off their models and approaches as politically neutral. What they mean is that they are conservative and support the status quo. I think the status quo needs to be sledgehammered.
Dan, oh so all New Keynesians are conservative, eh?
Mike, the people you are talking (the .01%) are reaping in their money through capital gains and carried interest. How does raising income tax rates affect these rent seekers on wall street?
The ones that DO care for the sick (doctors and surgeons), design our roads and buildings (engineers), and research to cure cancer (scientists) making their money in the form of income (and sometimes their incomes do exceed the 250K mark). Just because you are making over 250K doesn't make you a speculator and you shouldn't be so quick to lump all rich people together.
MMT is "inherently progressive". The entire theory is framed to give more power to the government. Wray even calls capitalists "undertakers" now. Many of these MMTers even describe themselves as communists.
These people hate capitalism. They hate freedom. They stand for big government. That's all. Take your blinders off people. MMT is a modern day form of communism and MMT tries to hide it every step of the way so they can win over new people to their cult.
"…Just because you are making over 250K…"
Only the amount of taxable income above 250K would be taxed at the higher rate, so we're not talking about large increases until we get well above that amount.
An additional 3% tax on a marginal increase of $50,000 would amount to $1,500.00.
A person earning $1 million/year pays the same tax as everyone else up to $250K (subject to their specific deductions).
In extreme times capital should be taxed (nothing spectacular, maybe a 1% to start with). Those whose financial wealth (including monetary assets, government debt) is beyond 1 billion marked to market should be 'confiscated' unless they invest their money.
There should be a similar principle of progressive taxation for savings up from 100k and above (considering equity position, ie. no negative equity and loses). Problem is legal loopholes and structures to evade these sort of taxes (offshoring, splitting assets between different holdings,e tc.).
I don't have nothing against high incomes, I have a problem with hoarders and accumulators who donp't spend money back into the system. I don't find Mosler proposal of accommodating hoarders indefinitely nonsensical at all (it favours financial speculation, "financialization" of the economy and future price instability and speculation) that's why I would favour taxing capital.
Rentism still is the biggest issue facing capitalism and humanity sine centuries ago and this would go in the right way to solve this problem. Otherwise capitalism will destroy itself and mutate via revolutions or evolve into corporate fascism to maintain the status quo.
The clock is ticking.
P.S: There isn't non-ideological economic policy prescription. Some people has been fooled to think there is.
MMT says what the situation it is, when you have to act and develop policies you steep into political territory. Theories which don't tell you want to do and what outcomes you will get from these actions are useless. It's useless to say "if deficits are reduced the economy will be worse" if you don't do nothing following that conclussion. So much for that 'discussion'.
These MMT fan boys never get tired. On every MMT blog it's the same 5 or 6 names repeating their religious mantra. Detroit Dan, Dan Kervick, Ron T, Paul, Tom Hickey, Matt Franko, JK, Jonf, WH10, Trixie, etc.
Don't you people ever get tired of being part of the scientology of economics? Or do none of you have jobs? Or are you paid members of the cult?
Not all. But a lot of mainstream economists seem positively desperate to keep the public sector out of the economy and leave everything to the private sector. Their empirically institutionally blind model-building is stubbornly, and suspiciously impervious to improvement. So I am very skeptical of their claims to technocratic neutrality.
MMT is "inherently progressive"…
How about outlining the elements of the MMT framework that make it progressive, or anti-capitalist or anti-freedom?
"…Wray even calls capitalists "undertakers" now…"
That may be Dr. Wray's opinion. It's not an element of MMT.
"…the same 5 or 6 names…"
You listed ten. Maybe your problem with MMT is you can't count.
Sorry about all the people on the internet that don't agree with you.
At least we are not cowards who hide our names behind aliases, and then invent new aliases to hide our old aliases.
Aren't you supposed to be busy managing investments and savings? Frankly, I find it hard to believe that anyone with your emotional disposition would be entrusted with any sizable quantity of other people's money.
Anon,
Glad to see WH10 has finally "seen the lightbulb go on"... ;)
Here's my two cents on the MMT/MMR/can their be economics without political ideology, etc..
It seems that the goal of MMR is reaonsable and of worth: try to decribe the operational realities/details of economics "as it currently is" without judgement or expression of what should or shouldn't be, or whether or not "as it currently is" is desirable.
Also, I don't think Cullen or any of the MMR people would argue that they as individuals are without political biases. Of course they have biases. We all do.
The appropriate questions are: is it possible to describe without judgement? And how well is it being achieved?
I think it's naive to say one can't do that. For example, one may or may not think that progressive taxation is a good thing, but surely we can disucss how progressive taxation "operates" without saying it is good or bad. Right?
With all that said, I'm not sure whether MMR is or isn't without political bias. Really… it depends on how you want to define what MMR "is" .... But I think the goal they've set for themselves is desirable (explaining reality without judgement). Whether or not they are currently successful at it, and whether or not their goal is genuine and sincere, is up for debate.
Some good points have been raised on both sides of the debate
My concern is that anyone with less than $1 million (at least) in liquid assets plus a reliable source of income probably spends a lot of time worrying about their finances. Don't get me wrong, $250K is a great income, but a medical emergency or another market crash could still wipe you out. These high earners are also supporting more of the population than they were just a decade ago as the labor force participation rate has fallen.
The 250K limit feels arbitrary and works to set factions of the 99% against each other, when the real targets should be the .01% who have enough spare change to buy themselves a President, a Congress and whole lot of judges and regulators.
MMR, MMT, MM BS, Mosler Economics, whatever. Who cares what you call it. It's all a derivative of the same BS that Mosler created.
"These high earners are also supporting more of the population than they were just a decade ago…"
High-earners don't support anyone, with taxes or anything else (at the Federal level).
The people that buy their products or services are supporting them.
Government spending is supporting the people that buy their products or services.
We need to get the causation right.
"…It's all a derivative of the same BS that Mosler created…"
So is MMR.
@ Anonymous
:) Well, in your characterization at least you don't seem think we are all atheistic communists anyway. Or did you forget to add that?
http://www.nakedcapitalism.com/2012/07/the-great-capitalist-heist-how-paris-hiltons-dogs-ended-up-better-off-than-you.html
Anonymous, are you a cult deprogrammer, or just doing research on a new cult you happened to find?
@paul
To clarify the point I was trying to make, I'll give a personal example. My neighbor runs a pharmacy and probably clears $250K. Her college age son works, but still lives (and eats) at home for free. Last year she moved her parents into the house and she also provides for their needs (no SS). She pays her sister for help with housework and personal errands, primarily because her sister hasn't been able to find good employment.
Our lingering high unemployment and underemployment has created an environment where high income earners are more likely to be financially supporting their adult children, as well as other family members and even friends.
Very clever Mike!
If the 0.01% are hanging their hats on the deficit bogeyman to stifle spending on social programs. I will laugh my freaking socks off if they have crafted the rod for their own backs.
If progressives are in power and continue to fall for the deficit reduction bull crap, they are backed into a corner where the only option is to tax the rich more. In fact as I type this is exactly what Hollande in France is doing.
There are loads of people on 250K with dependents and commitments who are not attending gala balls every night.
Change the threshold to $300k or $500k or increase taxes on capital gains..... it doesn't matter how the rich get taxed just that the tax system gets less regressive and more progressive.
There is no viable economic rationale for more regressive taxation. In fact we know it doesn't work...trickle down doesn't work. Let's just give more progressive a try shall we? Warren will survive and thrive.
The Solution says:
Do not retreat into purely self-interested behaviour.
Allow yourselves to be brave enough to believe in your own potential, as an unusually intelligent species upon this small planet, trapped within the vast empty wildnerness of space...
Tevot.
Mike Norman:
I never said I was apolitical. I have political views. I actually believe that the reason MMT has not made any inroads, is because it is impossible to meld it with political ideology of any kind.
MMT presupposes a political ideology of socialism insofar as it pertains to government control over money production. If government control over money production was abolished, and money was produced in competition, in the market, like shoes and computers and food, then MMT would cease to exist. As such, MMT is not apolitical. It is political.
It hasn't made any inroads because it's nothing but communist ideology covered by a veneer of accounting tautologies. Mosler
It's why you feel ideologically opposed to and feel obligated to ridicule a free market money system, a gold standard money system, and every other money system that is not state controlled fiat.
All of your acolytes on this blog, especially Hickey, constantly yammer that the state OUGHT to control the money supply, because it is allegedly "better" to have elected officials controlling money, than "corporations."
MMT has the stench of communism, and that is why flies like Hickey are attracted to it.
The "founding father" of MMT is of course the author of “The Economics of Control”, crypto-communist Abba Lerner. As Colander, co-author with Lerner in a 1980 book wrote that Lerner wanted to make it illegal to change prices without a permit in order to control inflation:
"Initially he [Lerner] toyed with various administrative wage and price control policies, but he found those lacking and soon gave them up. He replaced them, first, with a tax based incomes policy and ultimately, a market based[!!!] incomes policy in which property rights in prices are set and individuals have to buy the right to change prices from others who change their price in the opposite direction. It was this idea that formed the basis of our market[!!!!!!] anti inflation (MAP) book. (Lerner and Colander 1980) Under MAP, rights in value added prices would be tradable so that any firm wanting to change its nominal price would have to make a trade with another firm that wanted to change its nominal price in the opposite direction. Thus, by law, the average price level would be constant but relative prices would be free to change"
ftp://ftp.repec.org/opt/ReDIF/RePEc/mdl/ancoec/0234.pdf
Page 12
Have you ever asked why MMTers are overwhelmingly of a progressive-eat the rich-equality of wealth-anticapitalist-crypto commie-cult bent? Do you really think it's a coincidence it is like this? Or is there something within MMT that unintentionally attracts these sorts of people, the way Marx's theory unintentionally attracted genocidal maniacs?
Mike Norman:
------------
In addition, most small business people ($250k by your def) that I have spoken to SUPPORT gov't spending cuts, which are essentially taxes on the poor. So I say, too bad for the $250k. They're ideologues and ignorant and they are conducting class warfare. Let 'em pay like the rest.
Speaking of ideologues and the ignorant...
Government spending cuts are NOT "taxes" on anyone, least of all the poor. It is not class warfare. The government spending money hurts the poor, even if the poor receive the checks. This is because what helps the poor in the long run is more production, and spending money on consumption does not increase production. Saving and investing in production increases production. Consuming shrinks what is available for investment. While consumption is a necessary part of human life, it is the reward for producing. It is not the source of producing. Production is the source of consumption, not the other way around.
Spending cuts are a reduction of money GIVEN by the government, and within those cuts, they might cut subsidies to wealthy people, or they might cut subsidies to poor people, or both, which is what most of the Republicans you're referring to want. You cannot say spending cuts are "essentially taxes on the poor." Taxes on the poor would be the government TAKING AWAY what the poor EARNED. Reducing spending is not a tax hike, no more than me not giving you more of my money to invest is not me taking money away from you.
If the government reduced its spending and taxes dollar for dollar, then this would allow for relatively more money to circulate within the private sector and relatively less money to circulate within the government sector. It might be associated with absolutely less money circulating, but nobody said Zimbabwe was wealthy. Relatively more money circulating in the private sector and relative less money circulating in the government sector leads to more control of resources to private producers, who produce for the sake of consumers in a voluntary fashion, which leads to more capital accumulation, a higher productivity of labor, and reduction in impoverishment.
The USSR was dirt poor because the government controlled all the resources. The US became prosperous because here resource control was decentralized (although state control over money production is every day putting more pressure against decentralization and more pressure on centralization, since the treasury and large established corporations tend to be the initial receivers of inflation money).
Giving poor people, indeed giving wealthy people, giving anyone free money to spend, either from taxes or from the printing press, can only ever be a redirection of existing real wealth. It cannot boost real wealth.
Major,
You should contact a fellow who often comments here, Bob Roddis, his views and yours are very similar...
rsp
@ggm
I actually agree with your original point and that of Andrew - the marginal break should be higher than $250K, which isn't really that high by modern standards.
I took the oppurtunity to make a point about marginal tax rates that probably wasn't necessary.
Major-freedom..... An oasis of considered, rational thought in a desert of brainwashed extremism?.....a troll putting out white noise on the airwaves? ..... a brainwashed extremist?......or just a rant of the truly deranged?
Oh I don't know...You decide.
Major Freedom, there's a lot to disagree with in your previous two comments. I'll leave it to someone else if they feel like going through your comments issue by issue. But I have two questions…
You said: "Saving and investing in production increases production. Consuming shrinks what is available for investment."
Do you disagree with this statement (in our current system): 'loans create deposits' ?
If you don't disagree, then can you claim that savings is needed for investment?
Also, you said: "If the government reduced its spending and taxes dollar for dollar, then this would allow for relatively more money to circulate within the private sector and relatively less money to circulate within the government sector."
How does money circulate within the government sector? Doesn't all money immediately enter the private sector once the government spends it? (unless it is taxed)? Meaning, when a teacher is paid, or my grandma gets her social security check, or boeing gets paid to build a military aircraft (etc.), isn't all that money immediately injected in the private sector?
Oh Shit!
Now we have to put up with Major Freedom over here.
Once he gets to a board he just takes it over with his incessant pedantic rants. Whats the matter Major, Sumner ban you or something?
Just ignore him JK he wants to shift a good conversation from progressive taxation.....too....well..ehmmm..nonsense.
MF "Have you ever asked why MMTers are overwhelmingly of a progressive-eat the rich-equality of wealth-anticapitalist-crypto commie-cult bent? Do you really think it's a coincidence it is like this? Or is there something within MMT that unintentionally attracts these sorts of people,"
According to either-or, black or white logic any thing that disagrees with this extremist position is "socialism." Some folks don't do nuance, nor are their critical thinking skills very sharp. They can't distinguish between a description and a prescription.
MMT starts with a description of the current monetary system and proceeds to develop a macro theory from it, and uses it to formulate policy in terms of the almost universally accepted policy goals of growth, employment and price stability. Like everyone else that does macro and formulates policy proposals based on their understanding of what is possible in terms of the theory, and what is most effective in terms of the recognized policy goals and most efficient wrt policy tools.
Conversely, some folks rabble on how all other approaches to philosophy, economics, policy making and politics are wrong, theirs being the only one that is self-evidently correct. The charge then is that everyone else is either to stupid to see the obvious or else has evil designs on your freedom and property.
It would not be correct to say that you are even wrong, since what you spin is pure fiction and has little to do with reality as it is, or ever was, and won't come to pass since it is internally contradictory. It's a fantasy of the world as they would like it be to in their utopian pipe dream. It grows out of a mindset that appears to be both narcissistic and paranoid, as well as in denial of reality, and the behavior exhibited seems obsessive-compulsive. It serves a proof that all human beings are not rational.
I'm Bored with Major Freedom
"giving anyone money to spend, either from taxes or from the printing press, can only ever be a redirection of existing real wealth"
No, because not all real wealth has been created yet. Money has the potential to bring potential real wealth into existence in the present.
People can create real wealth when they have money with which to do it.
They can't create that real wealth when money is locked up in some gold-bug's vault, waiting for prices and wages to fall just that little bit lower.
Yours is an economics of perpetual depression.
It looks like some people are finally starting to see MMT for what it really is. All it took was a little publicity/scrutiny.
It's not surprising that MMT attracts admitted communists and progressives to their ranks. Their most influential economists are Lerner (crypto communist), Marx (communist), Minsky (member of the socialist party), Veblen (socialist), etc.
Looks like Lars is finally starting to confirm his own prejudices (to himself).
Is it me or are "austrian" attacks on MMT getting weaker by the week?
You have to love the strategy of labeling anything you don't like as communism. Because everything about communism is so bad right? It's just ignorant stereotyping.
Mussolini said that Fascism is revolutionary against liberalism "since it wants to reduce the size of the State to its necessary functions."
Thereby all republicans are fascists.... Such a puerile game.
two things. First, you all are so paranoid about the attacks on your cult that you now believe every critic is the same person. And second, your comments are all of the maturity level of children. Not terribly surprising given the precedent set by Randall Wray. No wonder no one takes you seriously. Paranoid children.
So now come the ad hominem attacks...There must be a psychological sequence of events when a person starts losing credibility.
Denial
Anger
Ad hominem attacks
Depression
Acceptance
Right, we are all communists, socialists, atheists, and assorted suspicious characters seduced into mindlessly following hedge fund principal, bank owner, and automotive company owner Warren Mosler, a closet Trotskyite, who has served as a mole in his profession and then ran for president as a Manchurian candidate. He even appeared as a speaker at many Tea Party events in order to cover his tracks and throw people off the scent.
"All of us" includes, of course, the FBI, CIA, DHS, NYPD, KGB, M15, Mosad, and assorted other covert operatives taking notes on everyone who visits MMT sites like this. So don't say you weren't warned that you are being watched.
On the other hand Lars has everyone's ear…
Matt Franko:
You should contact a fellow who often comments here, Bob Roddis, his views and yours are very similar...
Great minds think alike.
Andrew:
Major-freedom..... An oasis of considered, rational thought in a desert of brainwashed extremism?.....a troll putting out white noise on the airwaves? ..... a brainwashed extremist?......or just a rant of the truly deranged?
You mad?
JK:
You said: "Saving and investing in production increases production. Consuming shrinks what is available for investment."
Do you disagree with this statement (in our current system): 'loans create deposits' ?
No.
Do you disagree with this statement (in our current statement): loans created ex nihilo, i.e. without prior saving, only devalue existing money and does not increase real wealth due to resources being diverted away from where voluntary savings would have made them sustainable?
If you don't disagree, then can you claim that savings is needed for investment?
Real savings. I mean saving out of what has been earned. Not money printing "saving."
I don't conflate cash holdings with savings.
Also, you said: "If the government reduced its spending and taxes dollar for dollar, then this would allow for relatively more money to circulate within the private sector and relatively less money to circulate within the government sector."
How does money circulate within the government sector? Doesn't all money immediately enter the private sector once the government spends it?
I call that money circulating within the government sector. The fact that later on, it can exist at a certain point in time in the private sector, doesn't mean the "end up" is in the private sector. Money doesn't end up in the private sector. It can, and does, get taxed, borrowed, etc.
"Circulating within the government sector" is what I refer to as money being in control of government in any way.
Greg:
Oh Shit!
Now we have to put up with Major Freedom over here.
Oh no! Dissenting opinions! How will MMT ever survive?!?
Once he gets to a board he just takes it over with his incessant pedantic rants. Whats the matter Major, Sumner ban you or something?
Nah, I'm spreading my wings.
Andrew:
Just ignore him JK he wants to shift a good conversation from progressive taxation.....too....well..ehmmm..nonsense.
Abort! Abort!
Tom Hickey:
"Have you ever asked why MMTers are overwhelmingly of a progressive-eat the rich-equality of wealth-anticapitalist-crypto commie-cult bent? Do you really think it's a coincidence it is like this? Or is there something within MMT that unintentionally attracts these sorts of people,"
According to either-or, black or white logic any thing that disagrees with this extremist position is "socialism."
You mean MMT is logically socialist?
Logic is either-or, black and white. Logic is built on the law of non-contradiction.
Merely calling what I said "extremist" is not a valid rebuttal. For "extreme" compared to what? Are you saying it's bad to be an extremist against rape, murder and theft?
Some folks don't do nuance, nor are their critical thinking skills very sharp. They can't distinguish between a description and a prescription.
Blah blah blah. "Nuance" to you is codespeak for "I want to do some bad stuff, and I can't do it unless you occasionally look away and stop being so strict all the time."
MMT starts with a description of the current monetary system and proceeds to develop a macro theory from it, and uses it to formulate policy in terms of the almost universally accepted policy goals of growth, employment and price stability.
Aaaaaa-aaaaaa-aaaaaa-mmmmmennnnnnnnn...
"The most universally accepted policy goals" is not the same thing as intended policy consequences.
Stalin had a policy goal of making the Russian people wealthy. Didn't work out so well.
Like everyone else that does macro and formulates policy proposals based on their understanding of what is possible in terms of the theory, and what is most effective in terms of the recognized policy goals and most efficient wrt policy tools.
Effective, efficient, blah blah blah. Your mind is empty so you can only use vacuous buzzwords that show a very primitive and shallow understanding of economics.
Conversely, some folks rabble on how all other approaches to philosophy, economics, policy making and politics are wrong, theirs being the only one that is self-evidently correct.
You mean exactly like you did in your disastrous post on economics and epistemology, when you skipped over 1500 years of philosophical advancement and demanded that science must be falsifiable empiricism, as if that is the only self-evidently correct epistemology?
The charge then is that everyone else is either to stupid to see the obvious or else has evil designs on your freedom and property.
When did I say everyone else is stupid? Straw man. If you FEEL stupid, then that's another story.
It would not be correct to say that you are even wrong, since what you spin is pure fiction and has little to do with reality as it is, or ever was, and won't come to pass since it is internally contradictory. It's a fantasy of the world as they would like it be to in their utopian pipe dream. It grows out of a mindset that appears to be both narcissistic and paranoid, as well as in denial of reality, and the behavior exhibited seems obsessive-compulsive. It serves a proof that all human beings are not rational.
All antagonism. Zero substance. Is that your modus operandi?
You're denying reality. You're obsessive compulsive, writing 400 blog posts a day, relentlessly advancing MMT and ridiculing free markets. You are advancing a pipe dream of inflation as a panacea. You are proposing fiction. You are invoking an internally inconsistent epistemology, as I proved in that blog post regarding your epistemology.
Hey cool, see how easy that is? All antagonism and no substance? Anyone can play that primitive game.
Bored with Major Freedom said...
I'm Bored with Major Freedom
I'm bored with Bored with Major Freedom
Bored by Major Freedom:
"giving anyone money to spend, either from taxes or from the printing press, can only ever be a redirection of existing real wealth"
No, because not all real wealth has been created yet. Money has the potential to bring potential real wealth into existence in the present.
I thought you were bored?
You say money has the potential to bring real wealth into existence. OK, sure. But that does not mean devaluing existing money by inflation more money can bring about more wealth than the existing supply could.
People can create real wealth when they have money with which to do it.
There is such a thing as partial relative underproduction and partial relative overproduction of money, vis a vis other goods. But just how much money should exist, can only be known through the market process, as it is the market process that reveals, and produces the very information to know such a thing. It is like pretending to know how many loaves of bread should be produced on the basis that people need to eat. Well, OK, but where should the loaves be produced? By who? Where? In what quantity?
Money production can only be "rational" in the MARKET, if the market process itself determined the rate and extent of money production.
States are blind because they don't operate within the constraint of private property subject to profit and loss. And that is exactly why communists of all striped are so attracted with it. Communists loathe private property, and because our monetary system is monopolized by the state, exactly as it would be in full fledged communism, MMT has become a tool for equality, wealth redistribution, socialist political ideology.
People create real wealth when they exert the entrepreneurial ability, productivity, and effort to do it. Money is a tool of economic calculation. More of it cannot make people more productive than they already are.
They can't create that real wealth when money is locked up in some gold-bug's vault, waiting for prices and wages to fall just that little bit lower.
Nonsense. The US economy started as an agricultural economy and became the world's most prosperous economy and overtook Britain, under a gold standard.
This pathological fear of gold money being "locked up" in some "gold-bug's" vault, is due to an ignorance of what money is, and an ignorance of why producers produce. It is a pathological view of producers as "money misers", and hence makes it appear as though there is a need for an additional class of money "spenders" to make good and give the producers what they want. More and more gold money while everyone else has less and less. What nonsense. Even if gold was hoarded in this way, which it isn't, it will only make everyone's gold more valuable in exchanges. Their real standard of living won't fall.
What moron would keep his gold on hand and earn a 2% real return, when he can invest it or lend it and earn a 5% real return? Only in MMT land is this something to be expected.
A 100% reserve gold standard doesn't result in "hoarding". It leads to sustainable economic progress. Gold cash hoarding, if it ever takes place, cannot keep going until nobody but wealthy people have money left. Wealthy people EMPLOY workers, and pay them wages. A person cannot become wealthy by hoarding his money. Those who invest their money will outstrip him and reduce his profits.
Producers who produce to earn gold money don't just produce to earn gold money, they earn gold money so as to increase their consumption, and consumption entails spending.
Yours is an economics of perpetual depression.
It's the exact opposite. You're just making that up because you don't understand how a free market in money works.
Lars:
It looks like some people are finally starting to see MMT for what it really is. All it took was a little publicity/scrutiny.
It's not surprising that MMT attracts admitted communists and progressives to their ranks. Their most influential economists are Lerner (crypto communist), Marx (communist), Minsky (member of the socialist party), Veblen (socialist), etc.
Bingo. It's high time these cockroaches had the light shined on them.
Dumb "Lars":
I love that. Communists and progressives are basically the same in "Lars" world. No real difference.
Progressivism is just watered down communism. It's communism without the extremism. Everything progressives want, communists did (and more).
Austrian Tool:
I love these monickers being used by MMTers.
Is it me or are "austrian" attacks on MMT getting weaker by the week?
It's you.
Andrew:
You have to love the strategy of labeling anything you don't like as communism.
You have to love your fallacious claim that I cam calling communism "everything I don't agree with."
MMT isn't everything. I am saying MMT attracts communists. Since when was that a universal claim that everything I don't like communism? Oh that's right, never.
Because everything about communism is so bad right? It's just ignorant stereotyping.
Oh, so there is good in communism? No wonder you don't post your typical name.
Mussolini said that Fascism is revolutionary against liberalism "since it wants to reduce the size of the State to its necessary functions."
Who cares what fascists say. What matters is the ideas.
Thereby all republicans are fascists.... Such a puerile game.
I wasn't playing that game. I was correctly identifying the communistic roots of MMT. If that upsets you, I don't care.
Please do not straw man me as saying I call "everything I don't agree with" communism.
You're not everyone. MMT isn't everything.
It's called solipsism. Look into it.
Tom Hickey:
Right, we are all communists, socialists, atheists, and assorted suspicious characters seduced into mindlessly following hedge fund principal, bank owner, and automotive company owner Warren Mosler, a closet Trotskyite, who has served as a mole in his profession and then ran for president as a Manchurian candidate. He even appeared as a speaker at many Tea Party events in order to cover his tracks and throw people off the scent.
"All of us" includes, of course, the FBI, CIA, DHS, NYPD, KGB, M15, Mosad, and assorted other covert operatives taking notes on everyone who visits MMT sites like this. So don't say you weren't warned that you are being watched.
Right, because that's exactly the description being made. You summed it up EXACTLY. Not a single exaggeration. Not a single hysterical straw man. Nope. Nothing to see here. You have it all figured out.
If I'm a secret communist now, I want to have a code name. I think I like "Agent D".
MajorFreedom: "Do you disagree with this statement (in our current statement): loans created ex nihilo, i.e. without prior saving, only devalue existing money and does not increase real wealth due to resources being diverted away from where voluntary savings would have made them sustainable?"
Yes. I don't agree that new money necessarily devalues existing money. For example, imagine that the U.S. government gave me 50 trillion dollars in cash, and no one knew about it (for various reasons). And also lets assume that I do nothing with that money. Has the money in existence been devalued?
I don't think so. The world keeps moving on as if nothing as happened. Now, if I started using that 50 trillion in way that created bottlenecks in supply chains, and forced price inflation… then it seems correct to say that money has devalued existing money.
But if I slowly spent it here and there in the economy, I don't see why how this devalues current money. Like someone else said, my spending actually encourages the production of real wealth.
Where do you disagree?
Dan K "If I'm a secret communist now, I want to have a code name. I think I like "Agent D"."
Take a really good cover, something like "Major Freedom." No one will ever figure it out.
Look on the bright side...... If we keep him busy here, he's got less time to annoy everyone else.
Mike, this is a great rant! I'm all for it. But I'll bet you weren't expecting an attack of the killer tomatos to ruin what might have been a very good discussion.
I agree with you that the wealthy should be taxed. I don't even think such taxes contradict MMT since if the taxes save some deficit spending targeted on people who need the money, there will be a net gain in the fiscal multiplier.
I do have a bit of a disagreement with the 250K level. That gross income doesn't have the same buying power across the country, so I think perhaps the $250 K income level should apply to the median cost of living area in the US, while income levels for allowing the tax cut to lapse in other areas might be adjusted accordingly.
On the rest of the 'debate', anyone reading it would have to conclude that it is not being conducted in good faith. Anyone who throws the 'communist' label at MMT is just being intellectually dishonest. Marxian Communism calls for class warfare on behalf of the working class. MMT doesn't distinguish classes though it does recognize that a small part of the population, not necessarily a class, is now running the economy and exerting considerable control over the political system. Marxian communism also calls for the dictatorship of the proletariat and the withering away of the State, as well as the ownership of the means of production by the working class. MMT calls for none of that but assumes the continued existence of the market system, predominantly private ownership of the means of production, and a vibrant capitalism aided by government spending where such spending is needed to close output gaps,
There are of course different kinds of communism. There is Marxism-Leninism, which is very different from Marxian communism. But MMT isn't anything like that since it is opposed to dictatorship and any kind of command economy. There is also Maoism and Castroism. But MMT is very dissimilar from both, since there is no vision of Party control of the economy or political ideology.
All the Communisms we know of favor Government ownership of the means of industrial production as an ideal and a practice. MMT, of course, favors no such thing. In short, labeling MMT as 'communism' or as similar to 'communism' is simply dishonest; since MMT as a theory shares very little with historical communist movements or governments. It doesn't even share very much with historical examples of socialism, except that it shares political democracy with the socialists.
In view of all this it's clear that throwing the labels of 'communism' and 'socialism' at MMT advocates shows either ignorance of these systems, political and economic theories, or plain dishonesty. I think it's the latter, because it isn't possible for anyone to be so ignorant about these systems and to read MMT blogs as to conclude that MMT is either communist or socialist in character.
That's enough for this comment. I'll come back for another in a moment.
...reporting for duty here.
"Dishonest" is when prominent MMT commentators have admitted to being communists and then some other MMTer comes here to try to claim that MMTers aren't communists.
One of the killer tomatos says above
"MMT presupposes a political ideology of socialism insofar as it pertains to government control over money production. If government control over money production was abolished, and money was produced in competition, in the market, like shoes and computers and food, then MMT would cease to exist. As such, MMT is not apolitical. It is political."
Well, first I agree that MMT isn't apolitical. Here: http://www.correntewire.com/the_job_guarantee_and_the_mmt_core_part_twelve_theory_and_fact
I've argued that MMT, MMR and theories in general can't distinguish theories and facts, so MMT can't be descriptive in the way Cullen Roche claims that it is. And here: http://www.kmci.org/media/Against%20The%20Fact-Value%20Dichotomy.pdf
I've shown why pure description without value judgments or commitments is impossible as a matter of the logic of science. Here: http://www.correntewire.com/the_job_guarantee_and_the_mmt_core_part_fourteen_mmt_is_a_holistic_knowledge_claim_network
I've argued that the MMT and MMR knowledge claim networks are both value-impregnated. And here: http://www.correntewire.com/the_job_guarantee_and_the_mmt_core_part_fifteen_components_of_the_knowledge_claim_network I've listed the various components of MMT including what I think are its major value commitments.
I'm not the only one making such claims about science today. In fact, I think the claim that science, economic or otherwise, can be value-free is highly controversial and is certainly not the consensus view in the philosophy of science any longer. As for scientists themselves, most aren't self-conscious to be aware of or to analyze their own value commitments.
""Dishonest" is when prominent MMT commentators have admitted to being communists and then some other MMTer comes here to try to claim that MMTers aren't communists."
Either produce inks or please just shut up!
What's the big problem with being a communist anyhow?
Pointing out the failings of an authoritarian dictatorship excluded from commerce with the rest of the developed world makes a serious argument how?
Your host here has admitted that his political leanings are "left of communism".
http://mikenormaneconomics.blogspot.com/2012/05/are-humans-getting-better-turns-out-yes.html
Coming back to this:
"MMT presupposes a political ideology of socialism insofar as it pertains to government control over money production. If government control over money production was abolished, and money was produced in competition, in the market, like shoes and computers and food, then MMT would cease to exist. As such, MMT is not apolitical. It is political."
I'm not aware of socialist ideology ever asserting that control of money production is an aspect of socialism. Rather, the central aspect of socialism, which contemporary people who call themselves socialist don't practice is government ownership and control over the means of production. That my fine killer tomatos means control over "real capital." the machines, the skills, the technology, the organizations. It's already assumed that the government will have control of the money, because that's what independent States do.
Btw, the founders were certainly not socialist. Nevertheless, the constitution provides for Congress to have a monopoly over the production of money. Congress has diluted that monopoly by delegating the authority to produce money (thought not currency) to the banks through the Federal Reserve System. But this wasn't an act of the socialists; it was something legislated by business people acting through the Government.
As for MMT it doesn't suggest that the Government can control the production of money. In fact, it says that it can't; that it can set the price of money in the markets, but must let the quantity float. Some MMTers have said that they prefer nationalized banks, because they believe 1) that private banks introduce risk into the banking system; and 2) have no redeeming social value that justifies their existence. However, that doesn't make those MMT writers socialist. It just makes them advocates of government ownership of at least the very large banks. The same writers don't advocate general socialization of the means of production, so they're not socialists, but just pragmatists who say the banks are more trouble than they're worth. Given the actions over the past 30 years; this isn't an unreasonable position.
Finally, you say "If government control over money production was abolished, and money was produced in competition, in the market, like shoes and computers and food, then MMT would cease to exist." That may be, but the more important point is that if money were produced in this way, the State would cease to, and all our lives would be "nasty, brutish, and short." More importantly, still, such a condition would be short-lived, because the struggle among those producing competing currency would result in increasing conflict and violence and a new State would emerge run by the victorious producer of money, and would impose their currency on all of us and re-establish the money monopoly, but this time probably without democracy to soften the blow.
"Your host here has admitted that his political leanings are "left of communism""
First Tom, is not our host on this blog. Mike Norman, a capitalist trader is the owner of this blog.
Second, Tom Hickey's statement that he is to the left of communism, doesn't make him a communist, does it? If accurate, it puts him to the left of communism, wherever that is.
And third, It seems to me passing strange that the motto of the Musketeers "one for all, and all for one," would be viewed as either radical or as communist. I certainly think Dumas would have been surprised by such a claim.
Still further, next thing you'll be going on about is that Jesus was a communist too, because he said "Do Unto Others, As You Would Have Them Do Unto You."
This name-calling is getting a little ridiculous. Why don't you killer tomatos leave off the name-calling and stick to the issues? Afraid you'll just get your asses kicked, or will have to grow up past 6th grade?
Letsgetitdone, nice to hear some rational and knowledgeable dialogue. It's possible you are wasting your time on people with a very narrow perspective of life on earth and it's history. Most people still live within 50 miles of their birthplace. Many Americans like isolated Afghan tribes have never even seen the sea or experienced another culture.
The killer tomatoes may yet launch a counter attack when the satellite connection is back up on their survival bunker and they have googled communism.
I agree with Mike Norman. In fact, there should be a law limiting how much wealth one person should have. Such a law would not only prevent all the wealth from moving to the top one percent, but also might allow the so called wealthy to focus on something other than greed, like mankind. Just think of how different the world would be if people like Pete Peterson and the Kochcain brother didn't have their billions to buy politicians. Not only do we need campaign reform, we need wealth reform.
GLH,
With respect I would point out that imo people like Peterson and Koch actually think that they are helping their fellow man with their political advocacy.
Kochs endow Reason Magazine and I believe the Cato/Mercatus think tanks. Peterson has his Foundation. They are "true believers" imo, not frauds.
They at core seem to be primarily operating solely in the human tradition of "reason", seasoned with some greed ("more having") and perhaps gold-love (philaurion) thrown in for good measure in some sort of sick human mind twisting cocktail.
Then as the scripture relates: "Alleging themselves to be wise they ARE MADE stupid." Romans 1:22 and as another scripture relates: "vessels of dishonor" (think of a clay chamber pot). They are DIS-graced.
Because of this, both the Kochs and Peterson are blinded in a way, among others, towards how our current system of state currency is operating ("we're out of money": how stupid can you get?). They have lost some brain function ("are made stupid" ie morons), lost a certain cognitive ability related to understanding mathematical systems.
This looks like it is commonplace throughout the west's history in "powerful" people for sure as well as most of the less "powerful".
Although I'll cut the less "powerful" some slack as it is not their responsibility to understand these systems. Not their jobs in society.
rsp,
Quote: "MT presupposes a political ideology of socialism insofar as it pertains to government control over money production. If government control over money production was abolished, and money was produced in competition, in the market, like shoes and computers and food, then MMT would cease to exist."
Yawn....and we have someone else who wasn't read Adam Smith on competing currencies. So if we have multiple market currency then how do you stop someone from dumping the currencies you were saving to use to pay debt, or save for the future on a money market somewhere, losing value?
So Major Freedom disagrees with the Constitutional Idea that the value of money be regulated according to public law. So all currency becomes a commodities futures and how do we have savings in such a system? If they are taxes then by definition there is fiat. A gold standard is fiat.
According to Major Slavery monetary freedom is being forced at the barrel of gun to be forced acquire limited private assets of elements of the column 11 or private script to pay off debt in a legally binding public debt but the there is no public law regulated as it remains privately controlled. So naturally the monopoly supplier of the private currency will manipulate the supply to progressive acquire more and more asset for themselves and those who don't have this monopoly on what is used to pay public debt shouldn't have any right whatsoever to question this private money power cause that would be communism to question the private control of public tender.
Major Slavery defines freedom as his Majesty's divine right to impose publicly binding tender on everyone for the payment of private debt but that he alone gets to determine the quantity and value of tender.
Quote: "All of your acolytes on this blog, especially Hickey, constantly yammer that the state OUGHT to control the money supply, because it is allegedly "better" to have elected officials controlling money, than "corporations."
The US Constitution says the Congress has the authority to regulate of the value of coin. Apparently the Constitution is communist plot! Major Slavery would rather have royal "corporations" like the East India Trading Company determine such things like they did in India and other places before that Communist and Nationalist upstart in the damned Colonies.
Quote: "The "founding father" of MMT is of course the author of “The Economics of Control”, crypto-communist Abba Lerner."
I thought it was Wynne Godley cause of the sectorial balances... it's not like they play a role in MMT at all.
Nice quoting mining by the way.
Quote: " This is because what helps the poor in the long run is more production, and spending money on consumption does not increase production."
*Blinks* *Reads again* *Jaw hits floor*....sales don't determine production orders?....Are you a communist with production quota? In a Capitalist economy, why would there be production of goods if I don't believe there are going to be sales? What? I just make a production run absent any demand for it? Are you mad?
Quote: " Government spending cuts are NOT "taxes" on anyone, least of all the poor."
Spending cuts are increase in the cost of government services. If tax rate remains the same but the public sector output in nominal terms has declined. How is this not an increase in price? Isn't an tax increase by definition an increase on the cost of government services for the private sector?
Quote: "Saving and investing in production increases production"
No they don't. I used to work in a factory and increases in production is caused by new orders i.e. consumption. If no one was buying then then no one invests and the government money is as green anyone elses.
Stuffing my money in account in the Cayans does nothing to increase production orders. Buying back my stock doesn't increase production orders.
Quote: Consuming shrinks what is available for investment.
*Hits head on desk* Holy Malthus! OMG! The stupid! It burns!
I guess humanity has been doomed since the beginning because reproduction can only mean increasing consumption and that can only an every reducing the amount available investment in production? One human is too many!
According to Major Slavery the first man was the wealthiest and all others simply diluted his wealth.
So according to Major Slavery zero consumption would mean everything would be invested? Invested to do what? Investment is the placing savings in future consumption. People invest in production because they that believe that future production will be consumed.
According to Major Slavery, the Entrepreneur build business based on the idea that production doesn't need the the demand for it.
Brilliant! These glib slavertarians are super comedians. It's great the to start the week off with a good laugh.
"Progressivism is just watered down communism. It's communism without the extremism. Everything progressives want, communists did (and more)."
Ah, I understand now. Major Freedom is just stupid.
I thougt there might be more to it than that, but apparently not.
For the record. I claim to be the to the left of communism, Marxist, Marxist-Leninist, Marxist-Maoist, and Trotskyite — I don't read Stalin and the petty dictators of his ilk as communists; they were totalitarian tyrants.
The question is whether an economic system results in a slid toward state in which control is held by a class, a dictatorship of land, a dictatorship of the wealthy allied with the high bourgeoisie, or a dictatorship of the proletariat. They end up being the same, favoring the privileged and suppressing other classes.
I don't believe it can be argued successfully based on evidence that anything but laissez-faire leads to socialism and totalitarianism. But it can be argued successfully based on evidence that going in the laissez-faire leads to the fascism of a corporate state controlled by the wealthy and their cronies.
There are no examples of large purely laissez-faire civilized groups because pure laissez-faire based on individualism and self-interest is the law of the jungle. Even among animal groups that have a social structure, there are alpha males that act as monarchs as long as they are strong enough to resist challengers.
The priority assigned to the various factors of production determines economic infrastructure and class structure and through those control of power and the political system. The factors of production are land, capital and labor.
If land is taken to be the major factor, the result is feudalism and aristocracies. If capital is taken to be the major factor, the result is capitalism and the rule of of the owners of the monopolies and those who parasitical extract rent from the circular flow of the production-distribution-consumption cycle, which result corporate statism and control by the privilege of wealth. The privilege of wealth becomes the same as the privilege of land entitlement in feudalism through inheritance of wealth that leds to dynasties. If labor is made paramount, then it is ownership and rent-seeking that is suppressed, so that command systems become attractive, and command systems of another sort are developed that are susceptible of hijacking.
The radical position is to see everyone as a human being and work with other people of good will on developing the framework of a world view base on human value rather than animal instincts. The wise of all ages have delineated these differences and they are at the basis of the moral ideals to which most humans pay lip service but do not follow.
The question becomes then that since this is common knowledge, why to people profess these ideals and not live up to them. There are two answers. The answer of the reactionary right is that human beings are naturally flawed and must be forced to conform. The answer of the radical left is that people are naturally good and they are being misshapen through the process of socialization and enculturation.
The answer of the reactionary right is leave everyone as free as they are in the jungle, responsible for themselves, and therefore to get what they can take — within the bounds of law. Imprison those who step over the boundaries for life, or execute them. Virtue is conforming, like compulsory church attendance, but only at approved institutions.
The answer of the radical right is to go back to the law of the jungle and reject civilization as leading to serfdom.
The answer of the radical left is to raise consciousness by changing institutional arrangements to reflect human values rather than animal instincts. As someone who regards himself as a human being, a look forward to working with other human beings on building a better world not by pursuing self-interest as an animal instinct, but rather by engaging with others in an endeavor to unfold our potential as human beings who as human beings are identical in nature and as individuals each unique.
Thanks for putting up that link, Anonymous. I had forgotten it.
Humanity is still in its adolescence, so this evolutionary project can only be carried out by smaller groups at this stage. The larger application is in developing and testing models as experiments for possible future use on a larger scale. These are the people I hang with.
JK
For example, imagine that the U.S. government gave me 50 trillion dollars in cash, and no one knew about it (for various reasons). And also lets assume that I do nothing with that money. Has the money in existence been devalued?
You would not hold the money unless you intended to spend it in the future. If you intend to do nothing with the money, then you would not mind me burning it.
You are lying if you say you won't spend any of it. I am assuming my interlocutors are honest when I make my arguments.
I don't think so. The world keeps moving on as if nothing as happened. Now, if I started using that 50 trillion in way that created bottlenecks in supply chains, and forced price inflation… then it seems correct to say that money has devalued existing money.
It will force price inflation even if prices remain the same as they were yesterday, because the correct comparison is not yesterday's prices, but the prices that otherwise would have existed at that time.
But if I slowly spent it here and there in the economy, I don't see why how this devalues current money.
The same reason taking one grain of sand at a time from each brick of a house, is still destroying that house. The same reason giving someone one atom at a time of mercury, is still poisoning that person.
Slow devaluation is still devaluation.
Historically, consumer prices have risen by on average 3.5% annually since 1950. That's hardly insignificant.
Like someone else said, my spending actually encourages the production of real wealth.
No, it encourages higher prices of wealth. Saving and investment encourages the production of real wealth, not your "spending."
For if everyone "spent" their entire incomes on their consumption, then even though "spending" is taking place, the demand for labor would collapse to zero, the demand for capital goods would collapse to zero, and we'd be driven back the stone age.
It's not "spending" that increases real wealth. It's certain TYPES of spending.
Where do you disagree?
Everywhere?
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Andrew:
Look on the bright side...... If we keep him busy here, he's got less time to annoy everyone else.
I look on the bright side and think as long as you MMTers are debating online, you're not on the streets where you might do serious harm to others.
letsgetitdone:
On the rest of the 'debate', anyone reading it would have to conclude that it is not being conducted in good faith. Anyone who throws the 'communist' label at MMT is just being intellectually dishonest.
That is false on multiple levels. One, I said MMT attracts progressive-eat the rich-equality of wealth-anticapitalist-crypto commie-cult bent. Two, I didn't say MMT was communist. I said it attracts communist types. Just today on this blog some communist tried to lecture me about Marx. I post on many blogs, and this one has a higher that average population of commies.
Marxian Communism calls for class warfare on behalf of the working class.
Through, in part, centralization of money and banking in the hands of the state. Hmmm, I wonder kind of monetary system we have?
MMT doesn't distinguish classes though it does recognize that a small part of the population, not necessarily a class, is now running the economy and exerting considerable control over the political system.
That's a class. It's the class of those who control the state. Communists and fascists of all stripes try to gain control of the money printing press. Printing money to benefit the wealthy, printing money to benefit the poor.
Marxian communism also calls for the dictatorship of the proletariat and the withering away of the State, as well as the ownership of the means of production by the working class. MMT calls for none of that but assumes the continued existence of the market system, predominantly private ownership of the means of production, and a vibrant capitalism aided by government spending where such spending is needed to close output gaps
Marxism was inconsistent on this. Sometimes it was an advocacy for stateless and revolution, other times it was just waiting for the historical materialist forces to do it automatically.
At any rate, the abolition of the state in Marxism is but a stage in the whole Marxist ideology. There has to be dictatorship first. In this sense, the dictatorial control over money production is very much in the Marxist vein.
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letsgetitdone:
There are of course different kinds of communism. There is Marxism-Leninism, which is very different from Marxian communism. But MMT isn't anything like that since it is opposed to dictatorship and any kind of command economy. There is also Maoism and Castroism. But MMT is very dissimilar from both, since there is no vision of Party control of the economy or political ideology.
No MMTers are calling for the abolition of state dictatorial control over money production. On the contrary, there is this weird misplaced pride and "take that!" kind of attitude exuding from MMTers when it comes to the fact that money is state controlled (as it is in raw communist Marxism)
All the Communisms we know of favor Government ownership of the means of industrial production as an ideal and a practice. MMT, of course, favors no such thing.
Why do MMTers all favor state control over money production, which is communist, which is in Marx's Manifesto as one of the ten planks?
In short, labeling MMT as 'communism' or as similar to 'communism' is simply dishonest; since MMT as a theory shares very little with historical communist movements or governments. It doesn't even share very much with historical examples of socialism, except that it shares political democracy with the socialists.
That is false again on multiple levels. Nobody is labeling MMT as communist. I said it attracts communist types, and the record of that is very clear. I said MMT is DERIVED from communists such as Abba Lerner.
Yes, MMT is purely an accounting theory. The state does this, and this and that happen. But MMTers, the people, are all ideologues of the communist bent, in some form or another. Progressive taxes? Maintaining this central control? Hatred of "greedy" capitalists who would otherwise "hoard" all the gold in a free market standard, thus we need mommy and daddy government to rescue us from the evil producers of our wealth? This is all communism. You MMTers need to stop being intellectually dishonest with yourselves and others.
In view of all this it's clear that throwing the labels of 'communism' and 'socialism' at MMT advocates shows either ignorance of these systems, political and economic theories, or plain dishonesty.
It's the exact opposite. It is precisely those who deny it who are being intellectually dishonest.
I think it's the latter, because it isn't possible for anyone to be so ignorant about these systems and to read MMT blogs as to conclude that MMT is either communist or socialist in character.
State control of money production is not communist or socialist in character? You're either lying or just incredibly ignorant.
Anonymous:
"Dishonest" is when prominent MMT commentators have admitted to being communists and then some other MMTer comes here to try to claim that MMTers aren't communists.
Bingo.
Letsgetitdone
One of the killer tomatos says above
Oh, and it's another trend among communists to ad hominem their intellectual opponents. Just like Marx called capitalists "our friend Mr. Money Bags."
"MMT presupposes a political ideology of socialism insofar as it pertains to government control over money production. If government control over money production was abolished, and money was produced in competition, in the market, like shoes and computers and food, then MMT would cease to exist. As such, MMT is not apolitical. It is political."
Well, first I agree that MMT isn't apolitical.
I've argued that MMT, MMR and theories in general can't distinguish theories and facts, so MMT can't be descriptive in the way Cullen Roche claims that it is.
Collen Roche pointed out MMT is used by communists and socialists as a cover to promote their ideology. It might not be intentional, but it's there.
I've shown why pure description without value judgments or commitments is impossible as a matter of the logic of science.
Interesting, and I agree.
I've argued that the MMT and MMR knowledge claim networks are both value-impregnated.
You sound like someone who understands logic.
I'm not the only one making such claims about science today. In fact, I think the claim that science, economic or otherwise, can be value-free is highly controversial and is certainly not the consensus view in the philosophy of science any longer. As for scientists themselves, most aren't self-conscious to be aware of or to analyze their own value commitments.
Exactly.
Andrew
What's the big problem with being a communist anyhow?
Yeah, what's the problem with totalitarianism as a prerequisite? What's wrong with impoverishment, genocide, and lack of freedom?
Pointing out the failings of an authoritarian dictatorship excluded from commerce with the rest of the developed world makes a serious argument how?
Money production in this country and most others is authoritarian and excluded from commerce. You can't see how this would apply to MMT, which presupposes such dictatorial control?
Anonymous:
Your host here has admitted that his political leanings are "left of communism".
http://mikenormaneconomics.blogspot.com/2012/05/are-humans-getting-better-turns-out-yes.html
Yes, Tom Hickey is an extreme left wing ideologue. It bleeds through his anti-capitalist ramblings and Marxist platitudes.
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Letsgetitdone
I'm not aware of socialist ideology ever asserting that control of money production is an aspect of socialism.
"I am not aware" is not evidence of absence.
Rather, the central aspect of socialism, which contemporary people who call themselves socialist don't practice is government ownership and control over the means of production.
The means to produce money are state controlled, for the state uses coercion to monopolize money production.
How can you not see that the means of production includes the means to produce money?
That my fine killer tomatos means control over "real capital." the machines, the skills, the technology, the organizations. It's already assumed that the government will have control of the money, because that's what independent States do.
No, it's what some individuals do when they have state power. The Fed didn't exist until 1913.
Btw, the founders were certainly not socialist. Nevertheless, the constitution provides for Congress to have a monopoly over the production of money.
No, it does not. The Constitution makes no mention of any enumerated powers for the feds to create a monopoly bank and they have no authority in imposing it on the states where "only gold silver shall be legal tender".
Congress has diluted that monopoly by delegating the authority to produce money (thought not currency) to the banks through the Federal Reserve System. But this wasn't an act of the socialists; it was something legislated by business people acting through the Government.
It was an act of socialists. American progressives in the early 20th century. The same ones who wanted eugenics and state monopoly over education.
As for MMT it doesn't suggest that the Government can control the production of money.
It presupposes it.
In fact, it says that it can't; that it can set the price of money in the markets, but must let the quantity float.
That is nonsense. If the state can't control the production of money, then MMT cannot claim that the state controls the money supply through deficits and money printing, and so on.
Some MMTers have said that they prefer nationalized banks, because they believe 1) that private banks introduce risk into the banking system; and 2) have no redeeming social value that justifies their existence. However, that doesn't make those MMT writers socialist.
Actually it does. Socialism is government ownership and/or control over the means of production. Nationalizing banks is an act of socialism par excellence.
It just makes them advocates of government ownership of at least the very large banks.
That's socialism.
The same writers don't advocate general socialization of the means of production, so they're not socialists, but just pragmatists who say the banks are more trouble than they're worth. Given the actions over the past 30 years; this isn't an unreasonable position.
It's not the banks who are the problem, it's the state control over money that is the problem.
This is why MMT attracts socialists.
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letsgetitdone:
Finally, you say "If government control over money production was abolished, and money was produced in competition, in the market, like shoes and computers and food, then MMT would cease to exist." That may be, but the more important point is that if money were produced in this way, the State would cease to, and all our lives would be "nasty, brutish, and short."
Utterly false. Money production in the market doesn't mean the state will cease to exist. The US state for example taxed people in gold and silver, even though gold and silver were produced in a decentralized way. The standard of living of Americans increased substantially in this system. We started agrarian, and overtook Britain, and became the most prosperous nation ever, in this system.
Our lives would be improved, since no longer will our incomes be ravaged by inflation. No longer will economic calculation be so severely hampered by inflation. Money production that is constrained to market forces will make money and banking more promoting of living standards.
More importantly, still, such a condition would be short-lived, because the struggle among those producing competing currency would result in increasing conflict and violence and a new State would emerge run by the victorious producer of money, and would impose their currency on all of us and re-establish the money monopoly, but this time probably without democracy to soften the blow.
False again. There is no necessary inevitability to states.
Letsgetitdone:
Second, Tom Hickey's statement that he is to the left of communism, doesn't make him a communist, does it? If accurate, it puts him to the left of communism, wherever that is.
Being left of communism is still communism, the same way being to the right of fascism, is still fascism.
Being to the left of communism makes one...an extreme dogmatic communist.
And third, It seems to me passing strange that the motto of the Musketeers "one for all, and all for one," would be viewed as either radical or as communist. I certainly think Dumas would have been surprised by such a claim.
Interpretations must be made on the basis of the person saying it, not necessarily the person who originated it.
If a libertarian for example said "Given what I believe about private property rights, let people do what they want."
Then that would be far different if a communist said the same thing.
Still further, next thing you'll be going on about is that Jesus was a communist too, because he said "Do Unto Others, As You Would Have Them Do Unto You."
Blah blah.
This name-calling is getting a little ridiculous. Why don't you killer tomatos leave off the name-calling and stick to the issues?
It isn't name calling. It's ideology identification.
Afraid you'll just get your asses kicked, or will have to grow up past 6th grade?
Bring it on. I'll wipe the floor with you if you want to debate further.
Andrew
GLH
I agree with Mike Norman. In fact, there should be a law limiting how much wealth one person should have.
From each according to his ability, to each according to his need.
Who said MMT didn't attract progressive-wealth redistribution-anti-capitalist-crypto-commie types again?
Such a law would not only prevent all the wealth from moving to the top one percent, but also might allow the so called wealthy to focus on something other than greed, like mankind.
Wealth doesn't move up in capitalism. It is spread around and income is earned in a fashion that reflects individual ability.
The top one percent in capitalism would be the top one percent in terms of productivity.
Wealth is not a zero sum game. Wealth is not moved from poor to rich in capitalism. On the contrary, it is precisely under socialism that this occurs.
State control over money production. What moron would believe state controlling of money would have led to something other than wealth redirecting away from those who receive the new money last, to those who receive it first, namely, the state and their banking friends?
Just think of how different the world would be if people like Pete Peterson and the Kochcain brother didn't have their billions to buy politicians. Not only do we need campaign reform, we need wealth reform.
Yes, with a state and with state control of money, instead of some wealthy people controlling the state, we'd have some poor people controlling the state, after which those poor people become wealthy, and there will again arise a dichotomy between those with state power and those without, those who are wealthy, and those who are poor.
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Septeus7:
"MT presupposes a political ideology of socialism insofar as it pertains to government control over money production. If government control over money production was abolished, and money was produced in competition, in the market, like shoes and computers and food, then MMT would cease to exist."
Yawn....
Yeah, go back to sleep.
and we have someone else who wasn't read Adam Smith on competing currencies.
And we have someone who thinks that disagreeing with Adam Smith somehow implies not having read Adam Smith. The man was wrong. He was also wrong about the labor theory of value.
So if we have multiple market currency then how do you stop someone from dumping the currencies you were saving to use to pay debt, or save for the future on a money market somewhere, losing value?
It's truly remarkable how much you people quibble over the smallest of problems, when there is a giant problem in the middle of the room which has the same problem, and at a much higher scale.
To answer your banal question, who cares if "someone" dumps their currency that I was saving? This person is but one in a population of millions. Even if Bill Gates "dumped" all his wealth, it would have only the smallest effect on every other individual, since the effect of his wealth dumping is spread over hundreds of millions, if not billions of people.
You might as well scare monger and say "What if a grocery store owner decides to burn his store down for insurance? We can't have that risk! We must nationalize all food production and let the state control it all."
I won't lose if that person dumps their currency. If anyone will lose, it will be the lender. For I owe the lender what I agreed to by contract in the past. If the money is devalued in the meantime, then I pay back by debt in devalued currency. The lender accepts that risk, since he is the lender! Lending is risky activity.
All entrepreneurial activity is risky. Are you afraid when a person dumps their PC? Or their food? Or their car? Or their office? That would have a small effect on the value of your PC, your food, your car, your office. Should the state monopolize PC making, food making, car making, and office making too?
Your argument is not sound. It is based on fear, which is based on ignorance.
In a free market of money production, it will be almost impossible for any one person's spending/holding habits to significantly affect everyone else.
So Major Freedom disagrees with the Constitutional Idea that the value of money be regulated according to public law.
The constitution says only gold and silver shall be legal tender. YOU are the one who disagrees with the constitution (Not that I agree with the constitution!)
So all currency becomes a commodities futures and how do we have savings in such a system?
You earn money, then you abstain from consuming. That's saving. Why is that so hard?
If they are taxes then by definition there is fiat. A gold standard is fiat.
Gold is not fiat because the production of it is not set by state decree.
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Septeus7:
According to Major Slavery monetary freedom is being forced at the barrel of gun to be forced acquire limited private assets of elements of the column 11 or private script to pay off debt in a legally binding public debt but the there is no public law regulated as it remains privately controlled.
I want monetary competition in freedom. YOU are the one advocating for an enslaved monetary system where people MUST use fiat money the state prints. You have it backwards.
So naturally the monopoly supplier of the private currency will manipulate the supply to progressive acquire more and more asset for themselves and those who don't have this monopoly on what is used to pay public debt shouldn't have any right whatsoever to question this private money power cause that would be communism to question the private control of public tender.
They can't "manipulate" the supply. They can only produce money and then test it in the market. If others don't want it, they won't have to accept it. What "manipulation" are you talking about? Don't you mean just production of money? OK, well if you mean production of money, then the producer of money is going to have incur costs of capital, labor, and everything else that has a price. Private producers of money cannot arbitrarily increase their money production by whim. You're talking about the state, not private producers.
Major Slavery defines freedom as his Majesty's divine right to impose publicly binding tender on everyone for the payment of private debt but that he alone gets to determine the quantity and value of tender.
Haha, no, that's MMT and the progressive socialist types who are attracted to it.
I don't want to "impose" any money on anyone. I want individuals to be free to decide for themselves.
Are you that dense that you cannot even distinguish between moneary competition and monetary monopoly?
"All of your acolytes on this blog, especially Hickey, constantly yammer that the state OUGHT to control the money supply, because it is allegedly "better" to have elected officials controlling money, than "corporations."
The US Constitution says the Congress has the authority to regulate of the value of coin.
The Constitution says only gold and silver shall be legal tender. The "coin" mentioned is the regulation of gold and silver money, not fiat paper money.
Apparently the Constitution is communist plot!
Or, you are ignorant of the Constitution.
Major Slavery would rather have royal "corporations" like the East India Trading Company determine such things like they did in India and other places before that Communist and Nationalist upstart in the damned Colonies.
No, I want individuals to be free to produce their own money using their own property. If you want to produce money, you'd be free to do it, as long as you're able and willing to pay the costs.
In a division of labor capitalist society, not everyone has to produce money, but everyone is free to do it, the same way that not everyone has to produce food and cars, but everyone is free to do it.
Quote: "The "founding father" of MMT is of course the author of “The Economics of Control”, crypto-communist Abba Lerner."
I thought it was Wynne Godley cause of the sectorial balances...it's not like they play a role in MMT at all. Nice quoting mining by the way.
Yes, but that is subsidiary to MMT. The functional finance core of MMT is Lerner.
Septeus7:
Quote: " This is because what helps the poor in the long run is more production, and spending money on consumption does not increase production."
*Blinks* *Reads again* *Jaw hits floor*....sales don't determine production orders?....Are you a communist with production quota? In a Capitalist economy, why would there be production of goods if I don't believe there are going to be sales? What? I just make a production run absent any demand for it? Are you mad?
Relax, you're going to have an aneurysm.
Consumption only directs where among alternative lines production is to be concentrated. It does not CAUSE production.
Nominal sales cannot be met with supply UNLESS there was PRIOR saving and investment in the production of that supply. All the nominal demand in the world won't be able to buy a single good, unless there was saving and investment in the production of goods, which means money NOT consumed, but money saved and invested through capital goods purchases and labor purchases.
The dependence of production on consumption, which is what you have in mind, is only relevant at the individual firm level, where without nominal demand, an individual producer cannot earn profits. But in the aggregate, the relationship is reversed. Consumption depends entirely on production. Without production, nobody can consume. A producer not being able to find sales for his goods means that other producers could find sales for their goods. The consumers depend on the producers as such for their consumption. They can only choose among with producer to solicit. But they must choose, for they must eat.
Quote: " Government spending cuts are NOT "taxes" on anyone, least of all the poor."
Spending cuts are increase in the cost of government services.
Not if they are met with tax cuts, as I said further on.
Quote: "Saving and investing in production increases production"
No they don't.
Yes, they do.
Septeus7:
I used to work in a factory and increases in production is caused by new orders i.e. consumption.
Again you're only looking at the narrow example of a single firm.
Yes, a single firm depends on sales. But it is wrong to assume that the economy can produce more in the aggregate if there is more nominal demand as such.
Demands firm to firm are in fact mutually exclusive alternatives.
Moreover, a single firm cannot increase its production unless the owners save and invest in the production of more goods. More sales for your firm means higher sales revenues. If that earns you more profits, then you can save and invest more and divert more scarce resources to the production in your firm. That means fewer resources elsewhere. In order to compete then, you have to do a better job that the competition.
More production is not "caused" by more sales. It's caused by more saving and investment. If the buyers said "we want to buy more", then you cannot give them more unless you produce more. You can't produce more for them AFTER they give you sales money. You can only produce more if you saved and invested in the past such that the supply is ready to be sold.
If no one was buying then then no one invests and the government money is as green anyone elses.
If no one is buying, then lack of investment should be the least of your worries, since most of the population would be dead.
Given then that people "naturally" want and desire to consume, the problem of economic life then is how to produce the most given scarce resources, not how to maximize ways to consume, which shrinks real resources and reduces long term productivity.
You are ignoring capital consumption that can take place even with stable "spending".
Stuffing my money in account in the Cayans does nothing to increase production orders.
I said saving and investment, not cash hoarding.
Buying back my stock doesn't increase production orders.
It could if you believe your stock price is undervalued, such that the resulting capital structure is more attractive to investors.
Septeus7:
Quote: Consuming shrinks what is available for investment.
*Hits head on desk* Holy Malthus! OMG! The stupid! It burns!
Relax, you might have another aneurysm.
I guess humanity has been doomed since the beginning because reproduction can only mean increasing consumption and that can only an every reducing the amount available investment in production? One human is too many!
No. That consumption shrinks what is available for investment does not mean investment external to this cannot take place, and take place at a greater rate than consumption, such that the absolute amount of consumption increases over time.
It only means that if you buy a car for consumption, then the resources in that car could not also be used as part of a factory, or machine that helps in the production of further goods. If consumption is great enough, then it COULD threaten to reduce the absolute amount of resources available for investment, which will shrink future production. It only means that more consumption of corn can end up reducing the seed corn for next harvest, so to speak.
Just imagine if everyone ceased saving and investing, and merely spent their entire money on consumption. There will be "spending", but it would be disastrous for people's standard of living, since while resources are used up in consumption, there are no resources replacing the used up capital and equipment and factories. Factories would wear down, machines would break down, and eventually there will be no capital available left to produce further goods, despite there being lots of "consumption spending" taking place.
Capital goods will not be produced on any significant scale unless there is a demand for them, and to spend money on capital goods is to NOT spend money on consumption. But because in my imaginary scenario, everyone ONLY spends money on consumption, it means the demand for, and hence the production of, capital goods will collapse to zero or not much above zero.
What is true for 100% consumption shrinking the supply of resources available for investment to zero, is no less true for any consumption whatsoever shrinking the supply of resources that otherwise would have been available for investment.
According to Major Slavery the first man was the wealthiest and all others simply diluted his wealth.
No, that is a silly caricature built on an ignorance of how wealth is produced.
So according to Major Slavery zero consumption would mean everything would be invested?
No, I did not say that either. Zero consumption would mean everyone dies, and there won't be anyone to invest.
Consumption can only ever fall to a minimum, and because of that, there is always "room" for profitable investment. Indeed, in a modern economy such as ours, investment spending tends to far exceed consumption spending during the course of a given period of time. It is wrong to believe that with very little consumption spending, there is very little "room" for profitable investment.
Septeus7:
Invested to do what? Investment is the placing savings in future consumption. People invest in production because they that believe that future production will be consumed.
People can't consume unless people produce. Production occurs before consumption. I cannot fathom how you can believe the effect (consumption) somehow is the cause (production). Causes precede effects. Effects do not precede causes.
Consumption is caused by production. Without production, consumption is impossible.
Without consumption, life could not even exist, so you can't say without consumption "nobody would invest." Of course nobody would invest, because there would be nobody alive to do anything.
According to Major Slavery, the Entrepreneur build business based on the idea that production doesn't need the the demand for it.
No, that's not what I said either.
Brilliant! These glib slavertarians are super comedians. It's great the to start the week off with a good laugh.
The only thing that's funny is your inability to grasp economic principles.
Captain Capitalism:
"MMT presupposes a political ideology of socialism insofar as it pertains to government control over money production"
So according to Major Freedom the US is already a socialist country!
Insofar as it pertains to money production, yes, of course we are.
You surprised?
Centralized banking is one of the ten planks of Communism in Marx's Manifesto.
Sorry to have to tell you how the world is.
And has been a socialist country from the very beginning!
Not since the very beginning, because there was no central bank at the beginning.
What a stupid a$$.
You're an ignoramus.
"Progressivism is just watered down communism. It's communism without the extremism. Everything progressives want, communists did (and more)."
Ah, I understand now. Major Freedom is just stupid.
Not a valid rebuttal.
I thougt there might be more to it than that, but apparently not.
You only want an excuse not to engage, because you know you'll lose.
Andrew: "It's possible you are wasting your time on people with a very narrow perspective of life on earth and it's history."
I don't see it as a waste of time, or I wouldn't be doing it, and I have made it plain that I am not attempting to argue with children, crazy people, stones. That is a waste of time.
I think it is useful to state one's position clearly so that people know where one is coming from. Does personal belief and opinions that do not bear on fact matter in stating facts. Only in the way one selects, structures and prioritizes them. This will directly affect the way a person approaches social sciences, including economics. If one is an ontological individualist, then one will adopt methodological individualism.
If one is sees human nature as inherently social, one many still use individualism as a method but not believe in ontological individualism.
If one is a systems person ( as I am) then one will reject both ontological individualism and methodological individualism as insufficient in that they do not adequately take into account the dynamics of elements, relations, rules, and the whole.
Major,
Do you believe in "free trade"?
rsp
Tom Hickey:
For the record. I claim to be the to the left of communism, Marxist, Marxist-Leninist, Marxist-Maoist, and Trotskyite — I don't read Stalin and the petty dictators of his ilk as communists; they were totalitarian tyrants.
Marx welcomed and encouraged dictatorship, which he called raw communism. When you say you are left of communism, you're just saying you like the stateless utopia phase that allegedly spontaneously appears after the raw communist "Stalinesque" phase.
Speaking of not liking petty dictators, how that's state control of money production advocacy going for you?
Hitler was elected.
The question is whether an economic system results in a slid toward state in which control is held by a class, a dictatorship of land, a dictatorship of the wealthy allied with the high bourgeoisie, or a dictatorship of the proletariat. They end up being the same, favoring the privileged and suppressing other classes.
The economic system is itself a result of ideas. It cannot be considered primary. Ideas lead to property rights, and property rights leads to capital accumulation and division of labor.
If the ideas prevalent among the people are like yours, then dictatorship is the inevitable path.
The only relevant class you're referring to is the distinction between those who initiate coercion (the state), and those who are exploited by said coercion (those not in the state).
I don't believe it can be argued successfully based on evidence that anything but laissez-faire leads to socialism and totalitarianism.
It's obvious you're ignorant of the evidence then, because the Bolsheviks for example arose in a monarchical feudalist society ruled by Tsars. In Weimar, the monarchy was overtaken by fascists. Neither of these are examples of laissez-faire leading to socialism.
I don't believe it can be argued successfully based on evidence that laissez-faire leads to socialism and totalitarianism.
But it can be argued successfully based on evidence that going in the laissez-faire leads to the fascism of a corporate state controlled by the wealthy and their cronies.
Historical events are not evidence in the sphere of human action. That humans did one thing after another in the past, does not mean that they will do the same things in the future.
Laissez-faire does not lead to fascism, and fascism does not lead to laissez-faire. Monarchy does not lead to totalitarianism. All these historical events are unique to the past.
Your problem is that you cannot think outside the historical materialist box. You deny human reason and ideas changing the course of history. You view history as inevitable, where if people adopt the ideas and practice laissez faire, that they are without any control of their own, doomed to fascism.
Your philosophy is all messed up.
There are no examples of large purely laissez-faire civilized groups because pure laissez-faire based on individualism and self-interest is the law of the jungle.
Haha, then how can you claim that the evidence, meaning historical experience, shows that laissez-faire leads to fascism? Wouldn't there have to be historical instances of laissez-faire leading to fascism?
Or did you mean "pure" laissez-faire, in the sense of without a state? Well, if that's the case, then the only thing that history shows is that statism with a market oriented economy otherwise, has lead to corporatism.
That is not evidence of anarcho-capitalism leading to corporatism, for example.
Tom Hickey:
Even among animal groups that have a social structure, there are alpha males that act as monarchs as long as they are strong enough to resist challengers.
Humans aren't chimps. Saying "even among animals", as if it somehow adds validity to your fallacious point, is nothing but a depraved view of humans.
The priority assigned to the various factors of production determines economic infrastructure and class structure and through those control of power and the political system. The factors of production are land, capital and labor.
No, the ideas concerning property and technology determine economic infrastructure. The class structure in stateless capitalism is non-existent. There would only be voluntary traders and abstainers from trade. There would be no systematic initiations of force, and hence no classes.
If land is taken to be the major factor, the result is feudalism and aristocracies. If capital is taken to be the major factor, the result is capitalism and the rule of of the owners of the monopolies and those who parasitical extract rent from the circular flow of the production-distribution-consumption cycle, which result corporate statism and control by the privilege of wealth. The privilege of wealth becomes the same as the privilege of land entitlement in feudalism through inheritance of wealth that leds to dynasties. If labor is made paramount, then it is ownership and rent-seeking that is suppressed, so that command systems become attractive, and command systems of another sort are developed that are susceptible of hijacking.
False on all counts. There is no inevitability of feudalism, nor capitalism, nor communism.
The radical position is to see everyone as a human being and work with other people of good will on developing the framework of a world view base on human value rather than animal instincts. The wise of all ages have delineated these differences and they are at the basis of the moral ideals to which most humans pay lip service but do not follow.
Wise people are not communists, because wise people understand that there is no price system for the means of production in communism, and hence production would become a chaotic mess as there would be no way to calculate the difference between output value and input value, to see if the imperfect human actor made a gain or not, and the mass of people would become impoverished as a result.
Seeing everyone as a human being is not a radical position, if you didn't mean that sarcastically. Communists such as yourself do not view everyone as a human being. You view humans as mere means to some greater, more "noble" end that is not each individual with themselves. You don't view humans as they are, which is ends in themselves.
The question becomes then that since this is common knowledge, why to people profess these ideals and not live up to them. There are two answers. The answer of the reactionary right is that human beings are naturally flawed and must be forced to conform. The answer of the radical left is that people are naturally good and they are being misshapen through the process of socialization and enculturation.
How about the answer of the modest, left of center right independents? Or the right of left center right leftists?
The answer of the reactionary right is leave everyone as free as they are in the jungle, responsible for themselves, and therefore to get what they can take — within the bounds of law. Imprison those who step over the boundaries for life, or execute them. Virtue is conforming, like compulsory church attendance, but only at approved institutions.
I cannot see how preventing certain people from murdering or stealing from others is "forcing" them to "conform". I see it as preventing force, and preventing imposition of conforming, from aggressive people, so that each individual can do what he wants, provided he does not impose his wants on others against their will.
Tom Hickey:
The answer of the radical right is to go back to the law of the jungle and reject civilization as leading to serfdom.
The answer of the radical left is to raise consciousness by changing institutional arrangements to reflect human values rather than animal instincts.
You're biased, which is not surprising. Raise consciousness? By whom? How? By force of course. Turning individuals into serfs to force socialist man out of them.
You ever asked why left wing paradises ALSO turned into serfdom?
Instead of looking at everything through a left right lens, you should realize their are other alternatives off that spectrum, which holds radical leftism and radical rightism on the same end of the spectrum of totalitarianism and control.
As someone who regards himself as a human being, a look forward to working with other human beings on building a better world not by pursuing self-interest as an animal instinct, but rather by engaging with others in an endeavor to unfold our potential as human beings who as human beings are identical in nature and as individuals each unique.
What self-contradictory platitudes.
If individuals are identical in nature, then they cannot also be unique. Uniqueness means there is more to each individual than simply being "human" as everyone else.
In order for each individual to realize their potentials, their potentials have to be unique, as each human is unique. Since each human is unique, it follows that the full potential of individuals is not only what they can achieve as a "human", but ALSO, and I will argue more significantly, what they can achieve for themselves as unique individuals. This is just another way of saying self-interest, because it's an interest unique to each individual.
You cannot possibly say in one breath that you are against self-interest, which immediately obliterates uniqueness, and then in the next breath you say you are in favor of individuals achieving their unique potentials, for that immediately invokes self-interest.
Self-interest is not, contrary to communists, an interest that necessarily exploits others, is in harming other persons and their property. It COULD mean that, but then again so can those acting in accordance with "social interest" COULD harm people and their property as well.
What self-interest means is the unique set of interests that each individual has that are NOT entirely the same as anybody else's set of interests. This is not necessarily bad like you believe it is, because I know I would hate my life if I were you and had the same interests as you. So seeing as how I am glad I am not you, and I am very happy I don't have your interests, it follows that we are better off vis a vis each other if I pursuit my interests, and you pursuit your interests, and we do not engage in any way more than me showing how wrong you are all the time on this blog.
There is nothing you know or believe or value that would be of any benefit to me, so I am very thankful that I have my own self-interests and that I am pursuing them independent of your permission, your sanction, your approval.
Human being potentials are unique. Pursuing unique, i.e. self, interest is what humans do. You can't fight it. It's who we are.
Tom Hickey:
Humanity is still in its adolescence, so this evolutionary project can only be carried out by smaller groups at this stage. The larger application is in developing and testing models as experiments for possible future use on a larger scale. These are the people I hang with.
Humanity is not like a single person growing from baby to adulthood. You're hypostatizing to no end.
Each person is an end in themselves. There is no progression from baby to adult in a temporal series of ends in themselves existing and then not existing.
And your claim backfires. If you believe humanity is still in some form of adolescence, then shouldn't I take everything you say to be immature as well? Or are you setting an oh so typical escape clause for yourself where you are you subjected to the absolutism the rest of the people allegedly suffer from?
Matt Franko:
Major,
Do you believe in "free trade"?
Suppose I said yes. How would you answer?
Suppose I said no. How would you answer?
Where are you going with this?
Typo:
Or are you setting an oh so typical escape clause for yourself where you are not subjected to the absolutism the rest of the people allegedly suffer from?
Tom Hickey:
If one is a systems person ( as I am) then one will reject both ontological individualism and methodological individualism as insufficient in that they do not adequately take into account the dynamics of elements, relations, rules, and the whole.
OK, then explain, or "take into account", these alleged dynamics, relations, and so on, without addressing or depending on individual action in your explanation.
If you're right, it should be easy.
I'll just state for the record that MMT is not communist and I'm not a communist. Just so idiots out there know.
If you want falling wages, year after year, vote for Major Freedom.
If you want to lose your right to vote, vote for Major Freedom.
No thanks.
Captain Capitalist:
I'll just state for the record that MMT is not communist and I'm not a communist.
Then why does MMT attract communists?
If you want falling wages, year after year, vote for Major Freedom.
If you want rising REAL wages each year, vote for Major Freedom. If you want stagnating real wages, then continue to support Captain Capitalism's status quo garbage.
If you want to lose your right to vote, vote for Major Freedom.
If you want to cease being controlled by the mob, vote for Major Freedom.
If you want to be ruled by the mob on the silly basis that the mob is right, which has been empirically falsified enough times to make it a joke, then continue to support Captain Capitalism's status quo garbage.
No thanks.
It's not an offer of something I am giving you. It is a demand that your advocated policies cease being imposed on the minority against their will.
"No thanks" means "Sorry, I am going to continue to leech by depending on mommy and daddy government."
Its just rich that Major criticizes Tom for making 400 posts a day and then writes more in one comment thread than Tom has written all year! Man he loves to hear himself talk.
He needs to be medicated
No thanks means if you or any of your ilk ever try to get elected I won't vote for you. I don't agree with your arguments. And I have zero desire to live in your dystopian world.
Sorry.
Great post, Mike. I was wondering if I were nuts or maybe there is a measure of economic justice in redistributing income through taxes. And I am also happy to see you equate fiscal cuts to taxes on the middle and lower classes. It is about time we talked about using money for the public purpose.
Why do people respond to the trolls? Comments go on and on and on. Trolls like to be wordy. Why explain in a paragraph when you can use six or seven? Why not respond to the same thing again and again without end. Hell some on here spend their entire day writing crap. Why not delete them? They add noting. Deleting those comments takes nothing away.
MajorFreedom,
How does banking work in the society you describe of monetary competition? Do banks exist? If so, are they 100% reserve / non-fractional reserve? (i.e. they only lend out deposits?) If there are hundreds or thousands of competing currencies, are there currency markets with exhange rates? How does anyone "know" what anything is worth (in financial terms)?
It sounds like monetary competition could work on a very small scale where everyone knows each other and lives 'face-to-face' so that bonds of trust would be built. But free market competing currencies in a world of strangers?? It sounds like a big headache.
Which leads me to: how is international trade coordinated? Are we talking about possibly millions of currencies?
I empathize with your aversion to State/Elite control and manipulation of money, but nevertheless it seems the pros of top-down currency blocs/zones outweigh the cons.
Can you address these questions/confusions?
*** my second to last sentence is better re written….
"…. but nevertheless it seems the pros of top-down currency blocs/zones outweigh the cons when compared to a free market of monetary competition"
Jonf: "Why do people respond to the trolls? Comments go on and on and on. Trolls like to be wordy. Why explain in a paragraph when you can use six or seven? Why not respond to the same thing again and again without end. Hell some on here spend their entire day writing crap. Why not delete them? They add noting. Deleting those comments takes nothing away."
There are two types of trolling (at least). On is is hijacking the comment threads through diversion, and the second is spamming, aimed at stuffing a comment section to the degree that it becomes so tedious to sort through the comments that it becomes unreadable.
Spamming is grounds for deleting comments but in my judgment we aren't there yet. While some commenters are tendencious, this is the internet. People say things they would never say in a bar unless they were picking a fight. It's pretty obvious who the people are than make the list, so just ignore them if you think that it's a waste of time reading their comments.
Occasionally I see something worth responding to in that this brings out of a point. I don't have any illusions about the point being accepted the person whose comment I am addressing, but it is worth doing wrt to other that are likely to read it.
Opposition among views is fine and it is part of the dialectic that advances knowledge, but mindless opinons and personal insults are beside the point.
Most of the opposition here is by people smart enough to say intelligent things if they want to, but much of the time they don't, and it's their choice to become irrelevant and ignored if they keep repeating the same stuff over and over after it has been answered in some detail, or else just being superficial.
@Jonf
"Why do people respond to the trolls? Comments go on and on and on. Trolls like to be wordy…"
This is a good point. It's kind of like trying not to look when you drive by an accident scene. It's hard not to.
The world these guys describe seems un-livable to me.
Nothing to see here - move along (speaking only for myself).
There's actually a lot to see here than meets the eye if these folks would actually engage intelligently instead of being puerile.
This goes back to the origin in "political economy" of what subsequently became economics. At the time of the marginal revolution, economics began to divorce from political economy in the direction of formalization and econometrics. What was hotly debated before was no longer discussed but one view or other was simply presumed as an unstated assumption and methodological ground.
A lot can be learned by studying the history of thought because the first people that started looking at the issues generally targeted the basic issues that would be debated and refined subsequently. Classical economics began in 18th century England with Adam Smith and David Ricardo, and in the late 17th century in France with the Physiocrats, who advocated for laissez-faire, property rights and the importance of capital, even though they emphasized land in the still chiefly agricultural economy of the time.
The fundamental issues of political economy arise in the 19th century through the dialect among, e.g., Bastiat, Proudhon, J. S. Mill, Burke, and Marx. Today, the same views can be found coming into opposition with each other dialectically in Libertarian-Austrianism going back to Bastiat, left libertarianism traceable to Proudhon, liberalism as an elaboration of Mill, conservatism stemming from Burke, and Marxianism building on Marx. Neoliberalism stems from the Physiocrats in France and in England The Economist, which was founded in 1843 to promote laissez-faire, and the Manchester Liberals.
These are all different conceptions of a value system that determines the economic infrastructure of a society. They recognized that economics is fundamentally normative. Later, economists striving to make economics a science pretended it wasn't simply by presuming the norms as hidden assumptions.
The founding fathers were acquainted with the debate in political economy and generally subscribed to Liberalism, in which human rights are considered superior to property rights. Government intervention with checks and balances, and the constraint of representatives standing for election periodically, was instituted instead of laissez-faire. A written constitution established the social contract through a fundamental law of the land as an overarching rule for lawmaking and application of government power.
These same issues are being debated hotly today, and ignorance of the history of the debate clouds recognition of what the fundamental issues are.
There are two types of trolling (at least). One is is hijacking the comment threads through diversion...
Ok, that's the one I want to be. I call.
kthxbai
Major,
Your name has "freedom" in it and "free" trade is a major issue today in the global economy.
Does your love of "freedom" exceed your allegiance to your country?
Do you believe that human "freedom" is superior to a nation's sovereignty?
iow should the mercantilists be "free" to criss-cross our nations borders with their raw materials and finished goods unfettered?
Do national borders and boundaries mean anything to you? Or are they anathema to "freedom"?
rsp,
Matt, all the folks into "freedom" scream loudly when foreigners start buying US real assets or acquiring major financial interests in key US companies, especially when the foreigners that they don't like and even regard as "the enemy." Theirs is a one-way street.
Between Frum & a no-name from Bloomberg, they attempt to make the case that Austrians aren't smart enough to comment on economics since they are more philosophical and not empirical. As a matter of fact, the no-name said Austrian Economics is "philosophy dressed up as economics".
ZH, David Frum Hearts the Fed, Hates Mises
Rothbard on democracy:
"This dilemma occurs not only if the majority wishes to select a dictator, but also if it desires to establish the purely free society that we have outlined above. For that society has no overall monopoly-government organization, and the only place where equal voting would obtain would be in co-operatives, which have always been inefficient forms of organization. The only important form of voting, in that society, would be that of shareholders in joint stock companies, whose votes would not be equal, but proportionate to their shares of ownership in the company assets. Each individual’s vote, in that case, would be meaningfully tied to his share in the ownership of joint assets. In such a purely free society there would be nothing for democratic electors to vote about. Here, too, democracy can be only a possible route toward a free society, rather than an attribute of it.
....
Thus, democracy is compatible neither with the purely free society nor with socialism."
(Rothbard, "Power and Market")
Hands up who wants to live in Rothbard's nightmare "purely free society"?
http://library.mises.org/books/Murray%20N%20Rothbard/Power%20and%20Market%20Government%20and%20the%20Economy.pdf
Right Tom,
I dont like it when foreigners start to buy stuff here either (remember "Dubai Ports") and am for (at least) balanced trade.
But I will be the first to admit that I am authoritarian on the political compass and realize this is at core an authoritarian view.
I'd still be interested to see how the Major would respond to this issue... the "freedom" lovers may be bordering on seditious behavior imo.....
Captain: YIKES!!!!
rsp,
"There's actually a lot to see here than meets the eye if these folks would actually engage intelligently instead of being puerile."
Comrade Tom, you've hit the important point here that distinguishes between being perceived as a troll or someone interested in an honest exchange of ideas.
Why is it that those who are the first to call someone a communist seem to have the least understanding of where the communists were actually coming from?
Fun fact: they weren't all that interesting in a better functioning capitalist system, and their program didn't include somewhat higher taxes on the wealthy and better pay for teachers. It involved appropriating a country's economy and pwning the $h!t out of kulaks.
Get your heads in the game, you wacky Austrians. And the real game, not the windmill jousts you've engaged in since Mises.
J: I'm not aware of socialist ideology ever asserting that control of money production is an aspect of socialism.
MF: "I am not aware" is not evidence of absence.
J1: That's true. But it is an invitation for someone who believes it is to produce some links, a coherent argument, or some evidence showing that it is. You haven't done any such thing, which suggests that you're incapable of doing so and just talking through your hat.
J: Rather, the central aspect of socialism, which contemporary people who call themselves socialist don't practice is government ownership and control over the means of production.
MF: The means to produce money are state controlled, for the state uses coercion to monopolize money production.
How can you not see that the means of production includes the means to produce money?
J1: Easy. I can well imagine a system which worked through barter where the means of production was controlled by the State, but where there's no “money” as we understand the term. I can also easily imagine a system where the State controlled the production of money, but the real capital used to produce goods and other real capital was owned and controlled by the private sector.
The point here is that State control over the means to produce money is neither a necessary nor a sufficient condition for socialism. So an honest and serious person who wasn't a troll wouldn't offer this clearly false inference: “State control over money implies socialism.”
J: That my fine killer tomatos means control over "real capital." the machines, the skills, the technology, the organizations. It's already assumed that the government will have control of the money, because that's what independent States do.
MJ: No, it's what some individuals do when they have state power. The Fed didn't exist until 1913.
J1: The Constitution has existed since 1789, and under the Constitution, Congress has the exclusive power to coin US money and create currency, which, in turn, is the only money acceptable for paying one's taxes.
J: Btw, the founders were certainly not socialist. Nevertheless, the constitution provides for Congress to have a monopoly over the production of money.
MF: No, it does not. The Constitution makes no mention of any enumerated powers for the feds to create a monopoly bank and they have no authority in imposing it on the states where "only gold silver shall be legal tender".
J1: Well, I guess we disagree on the meaning of the Constitution. But I think the Supreme Court, even the extreme rightist Court of today agrees with me and not with you. Maybe you think Roberts, Kennedy, Alito, Scalia, and Thomas are communists too, since all of them seem to think the Fed is constitutional. I have to admit that I am not so sure that it is constitutional due to separation of powers. However that's beside the present point.
Continuing my reply to MF:
J: Congress has diluted that monopoly by delegating the authority to produce money (thought not currency) to the banks through the Federal Reserve System. But this wasn't an act of the socialists; it was something legislated by business people acting through the Government.
MF: It was an act of socialists. American progressives in the early 20th century. The same ones who wanted eugenics and state monopoly over education.
J1: You don't know the history very well. The progressives were important in Congress at the time and Wilson was a progressive; but the accounts of the passage of the legislation make it clear that the Fed blueprint was designed by the Street; not the progressives, and that the bankers got their way in the legislation, as is evidence by the fact that the private banks OWN all the regional Fed banks., and that the Board of Governors itself though a Government agency, is not a Bank.
J : As for MMT it doesn't suggest that the Government can control the production of money.
MF: It presupposes it.
J1: No you're flat out wrong. If you'd read any MMT, you'd know that most reserves are created by banks in the process of lending money to borrowers. As we often say “loans create deposits.” Deposits however are also reserves. Bank creation of money through lending forces the Fed to eventually create reserves out of thin air to make sure the banking system doesn't run short of reserves. But here the private banks are the drivers, and the Fed must accommodate them or see the whole banking system collapse.
The government only "produces" it's own currency, in which it spends, taxes and borrows. Banks "produce" their own type of money. Some other organisations create money-things, some communities issue their own local currencies, etc.
The government determines the nature of the overall monetary system by setting the rules and parameters within which it exists.
"only gold silver shall be legal tender".
the constitution doesn't say that only gold and silver shall be legal tender within the states. It says:
"No State shall... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts"
This means a state can't make potatoes legal tender, for example, but it can make gold and silver coin legal tender within the state.
United States currency, however, is legal tender across the whole of the United States.
"the accounts of the passage of the legislation make it clear that the Fed blueprint was designed by the Street; not the progressives, and that the bankers got their way in the legislation, as is evidence by the fact that the private banks OWN all the regional Fed banks"
The Federal Reserve Act fuses proposals put forward by Congress and the banking sector. It's a compromise, in which overall control rests with the government, but member banks are stockholders of their regional reserve bank. They cannot sell or transfer their stock in the regional reserve bank to any other party.
The federal reserve banks carry out monetary policy as determined by the Board of Governors (a government agency), and as such are described as "instrumentalities" of the federal government.
But you're right that "carrying out monetary policy" basically means accomodating banks' demand for reserves and bonds and thereby maintaining a target interest rate.
@ letsgetitdone
Be more careful with your words when describing this process:
"If you'd read any MMT, you'd know that most reserves are created by banks in the process of lending money to borrowers. As we often say “loans create deposits.” Deposits however are also reserves. Bank creation of money through lending forces the Fed to eventually create reserves out of thin air to make sure the banking system doesn't run short of reserves."
There was a huge semantic disgreement over who "creates" reserves. On the one side Dan Kervick was arguing the Fed does… because Dan was defining create as 'where new reserves come from'
Whereas the person arguing with him, was defining "create" as 'the process that forces the Fed to supply the reserves'
p.s. how about an unspoken rule around here that whenever someone starts calling people communists, everyone in here starts referring to each other as "Comrade __________" :)
how about an unspoken rule around here that whenever someone starts calling people communists, everyone in here starts referring to each other as "Comrade __________"
I prefer Comradesse.
Thanks.
Continuing my reply to MF:
J: In fact, it says that it can't; that it can set the price of money in the markets, but must let the quantity float.
MF: That is nonsense. If the state can't control the production of money, then MMT cannot claim that the state controls the money supply through deficits and money printing, and so on.
J1: MMT doesn't claim that the State controls the money supply under present arrangements. It claims that the Fed can control overnight rates and heavily influence longer term rates; but it also claims that the Government, the currency monopolist, must let the quantity float
J: Some MMTers have said that they prefer nationalized banks, because they believe 1) that private banks introduce risk into the banking system; and 2) have no redeeming social value that justifies their existence. However, that doesn't make those MMT writers socialist.
MF: Actually it does. Socialism is government ownership and/or control over the means of production. Nationalizing banks is an act of socialism par excellence.
J1: Again you have a problem with part-whole inferences, don't you? Nationalizing banks may be “an act of socialism par excellence,” but that doesn't make people who favor nationalizing banks socialists; it only makes them willing to socialize a particular function in the economy.
It says nothing about a general preference for socializing economic activity. MMTers generally believe in mixed economies, where some functions are socialized and some are not. The criteria for socializing something are practical, not ideological. It;s always a question of whether the market is working or not, or whether it's a practical structuring of activity in a particular area. National Defense, for example, is an area that can't be left to the market. Neither can public safety. Neither can education in my view. As for banking, the whole system has been beset by increasing corruption and instability since the 1980s. The market's not working in banking. It's led to dangerous concentrations of economic and political power, to wholesale fraud, and to enormous destruction of nominal wealth across most modern nations. It;s time for a public solution to the banking mess.
J: It just makes them advocates of government ownership of at least the very large banks.
MF: That's socialism.
J1: No it's not; it's just favoring a pragmatic solution in a mixed economy.
J: The same writers don't advocate general socialization of the means of production, so they're not socialists, but just pragmatists who say the banks are more trouble than they're worth. Given their actions and results over the past 30 years; this is a an obvious conclusion for people in touch with the real world to draw.
MF: It's not the banks who are the problem, it's the state control over money that is the problem.
This is why MMT attracts socialists.
J1: First, MMT doesn't attract socialists. You say that it does. But you're just name-calling and using your faulty part-whole logic to label anyone who advocates that Government run anything in the economy a "socialist." You're not making a serious argument, but are just trolling.
Second, there's no State control over the Banks. If there had been the crash of 2008 would never have happened. From where I sit, the Banks are controlling the State. That wouldn't be the case if they were all part of the Treasury Department.
Third, most MMTers don't support bank nationalization. Most would be content with strong regulation to prevent fraud and would probably rather have the Fed placed under Treasury, than have it remain where it is. So, MMT in general, is agnostic about bank nationalization, neither favoring nor opposing the idea.
I want to be clear about this because your dishonesty in debate makes it likely that you would try to claim that MMT as a whole favors nationalization of Banks. But that is not true. Only a few of us, including myself prefer this, because we'd like to avoid having to F—K around with the banks any more. But that's a pragmatic judgment. I'm open to argument about why it would be better to retain banks as private institutions. I have no ideological socialist “thing” preventing me from accepting compelling justifications about why they ought to remain private, simply because I'm not a socialist, nor am I a capitalist. I'm just a person looking for solutions to economic, social, and political problems that will work, and I don't care whether they're public sector or private sector so long as they work and don't further increase social and economic inequality.
Continuing my reply to MF:
J: In fact, MMT says that the government can't control the money supply; that it can set the price of money in the markets, but must let the quantity float.
MF: That is nonsense. If the state can't control the production of money, then MMT cannot claim that the state controls the money supply through deficits and money printing, and so on.
J1: Again you don't know what you're talking about. MMT doesn't claim that the State controls the money supply under present arrangements. It claims that the Fed can control overnight rates and heavily influence longer term rates; but it also claims that the Government, the currency monopolist, must let the quantity float to be determined by the market.
J: Some MMTers have said that they prefer nationalized banks, because they believe 1) that private banks introduce risk into the banking system; and 2) have no redeeming social value that justifies their existence. However, that doesn't make those MMT writers socialist.
MF: Actually it does. Socialism is government ownership and/or control over the means of production. Nationalizing banks is an act of socialism par excellence.
J1: Again you have a problem with part-whole inferences, don't you? Nationalizing banks may be “an act of socialism par excellence,” but that doesn't make people who favor nationalizing banks socialists; it only makes them willing to socialize a particular function in the economy.
It says nothing about a general preference for socializing economic activity. MMTers generally believe in mixed economies, where some functions are run by Government and most are not. The criteria for socializing something are practical, not ideological. It's always a question of whether the market is working or not, or whether markets are a practical structuring of activity in a particular area. National Defense, for example, is an area that can't be left to the market. Neither can public safety. Neither can education in my view. As for banking, the whole system has been beset by increasing corruption and instability since the 1980s. The market's not working in banking. It's led to dangerous concentrations of economic and political power, to wholesale fraud, and to enormous destruction of nominal wealth across most modern nations. It's time for a public solution to the banking mess.
@JK, I was craeful in my statement. So, was Dan, but I think Dan now knows, after being corrected by Warren Mosler that the money created by the banks when they make loans are, simultaneously, reserves.
Another reply to the Major Killer Tomato.
J1: As I said, when we lived under the gold standard we were much more frequently and seriously subject to severe business cycles and to concentration of wealth in a few hands. More importantly, our lives are not ravaged by inflation, the growth in GDP, prosperity, standards of living, and productivity have greatly outstripped the de-evaluation of our currency during the 20th century . You may feel ravaged by inflation. But most Americans don't share that view.
J: More importantly, still, such a condition would be short-lived, because the struggle among those producing competing currency would result in increasing conflict and violence and a new State would emerge run by the victorious producer of money, and would impose their currency on all of us and re-establish the money monopoly, but this time probably without democracy to soften the blow.
False again. There is no necessary inevitability to states.
JF: I don't want to get into a debate about what is a State and what isn't. I'm saying that all political systems, if they are unified, have authorities that are more or less legitimate and structures of legitimacy partly sustained by norms and culture and partly sustained by a near monopoly of legitimate physical coercion. In such systems, the authorities define what shall count as money by making it known what they will accept as taxes in return for which the authorities will provide peace, order, protection, the fostering of trade and economic life and perhaps other benefits. Such structures of authority are inevitable. They may change. They may be overthrown by self-organizing movements from time to time, but always the movements that overthrow them give way to new structures of legitimacy and new authorities.
These are necessary features of all human society, and there is no alternative to them. In that sense, 'the state” can never wither away except during extreme periods of conflict, and these cannot last for very long because people become exhausted and yearn, eventually, for order. The question is what kind of order will it be. I think it should be a constitutional order with constraints on the authorities and with plenty of channels for continuing self-organization giving rise to new movements that can peacefully change institutions and authorities. But whether it's that kind of order or an order in which a tyrannical oligarchy runs things, sooner or later conflict will end and there will be order. That is just the nature of human society.
@ letsgetitdone
Now I'm confused. During that disagreement I felt both sides were arguing the same point, but now it seems you're saying Dan was mistaken…
When a bank creates a loan, simultanously deposits are created into the loan recipients account. Are you saying at this point in time, Reserves have now been created?
My understanding was that banks do not lend Reserves…. that at determined period of time, they must seek out Reserves to make sure they are in accordance with the Reserve Ratio.
Or, do you mean that when a loan/deposit is created, that act immediate creates a shortage of Reserves in the system, and therefore forces the creation of reserves because someone in that system (not necessarily the bank that made the loan) is definitely now going to be short on Reserves (given the FFR held constant)?
What am I missing? thanks!
To go a little furher…
If when a bank makes a loan, and therefore creates a deposit, this simultaneously creates more Reserves in the system…
Then, all else equal, in order for the Fed to keep the FFR constant, it must SELL government bonds to "soak up" those new Reserves?
I thought it was the opposite: when a bank makes a loan, again all else held constant, that loan and deposit creates a shortage of Reserve in the system, and therefore the Fed must BUY government bonds, in order to inject more Reserves into the system (again, assuming the FFR target is maintained)
Yet another reply to the killer tomato:
J: Finally, you say "If government control over money production was abolished, and money was produced in competition, in the market, like shoes and computers and food, then MMT would cease to exist." That may be, but the more important point is that if money were produced in this way, the State would cease to, and all our lives would be "nasty, brutish, and short."
MF: Utterly false. Money production in the market doesn't mean the state will cease to exist. The US state for example taxed people in gold and silver, even though gold and silver were produced in a decentralized way. The standard of living of Americans increased substantially in this system. We started agrarian, and overtook Britain, and became the most prosperous nation ever, in this system.
J1: First, under the gold standard, there were extreme business cycles and long periods of stagnation between the economic bubbles that grew the economy in the US. Second, the argument here is what you mean by “produced.” The State may not have “produced” the gold and silver with public sector employees; but it was the government that defined the gold standard as the commodity backing of the unit of the account, and that also minted the coins and created the currency that constituted the State's money. Gold and silver were not money. Money was gold and silver coins and also gold and silver certificates, and sometimes in our history paper money that had no backing in gold and silver and that was “produced”. If the State had ceased to produce its own money, but has simply let the banks produce money and define the unit of account then the State would have ceased to exist because it would not have had the wherewithal to collect taxes or acquire the currency defined by the banks or other private individuals.
MF: Our lives would be improved, since no longer will our incomes be ravaged by inflation. No longer will economic calculation be so severely hampered by inflation. Money production that is constrained to market forces will make money and banking more promoting of living standards.
J1: As I said, when we lived under the gold standard we were much more frequently and seriously subject to severe business cycles and to concentration of wealth in a few hands. More importantly, our lives are not ravaged by inflation, the growth in GDP, prosperity, standards of living, and productivity have greatly outstripped the de-evaluation of our currency during the 20th century. You may feel ravaged by inflation. But most Americans don't share that view.
Continuing yet another reply:
J: More importantly, still, such a condition would be short-lived, because the struggle among those producing competing currency would result in increasing conflict and violence and a new State would emerge run by the victorious producer of money, and would impose their currency on all of us and re-establish the money monopoly, but this time probably without democracy to soften the blow.
False again. There is no necessary inevitability to states.
JF: I don't want to get into a debate about what is a State and what isn't. I'm saying that all political systems, if they are unified, have authorities that are more or less legitimate and structures of legitimacy partly sustained by norms and culture and partly sustained by a near monopoly of legitimate physical coercion. In such systems, the authorities define what shall count as money by making it known what they will accept as taxes in return for which the authorities will provide peace, order, protection, the fostering of trade and economic life and perhaps other benefits. Such structures of authority are inevitable. They may change. They may be overthrown by self-organizing movements from time to time, but always the movements that overthrow them give way to new structures of legitimacy and new authorities.
These are necessary features of all human society, and there is no alternative to them. In that sense, 'the state” can never wither away except during extreme periods of conflict, and these cannot last for very long because people become exhausted and yearn, eventually, for order. The question is what kind of order will it be. I think it should be a constitutional order with constraints on the authorities and with plenty of channels for continuing self-organization giving rise to new movements that can peacefully change institutions and authorities. But whether it's that kind of order or an order in which a tyrannical oligarchy runs things, sooner or later conflict will end and there will be order. That is just the nature of human society.
Final Reply to the KT:
J: Second, Tom Hickey's statement that he is to the left of communism, doesn't make him a communist, does it? If accurate, it puts him to the left of communism, wherever that is.
MF: Being left of communism is still communism, the same way being to the right of fascism, is still fascism.
Being to the left of communism makes one...an extreme dogmatic communist.
J1: Who told you that? The man in the moon? You can define things anyway you want to. But, if you depart too far from how other people understand something than your language will be unintelligible and as soon as people realize what you're doing they won't even try to communicate with you anymore.
I think that Communists are what they are and that people to the left of them have an entirely different ideology. For example, they might be radical communitarian, non-violent mystical Christians. Or they might be people who don't believe in extreme selflessness and charity, but not class struggle or dictatorship of the proletariat or any ownership of the means of production at all.
People like that certainly would not be Communists as modern Americans understand that term. And as for people to the right of Fascism, it seems to me they would be people who hated everybody else they viewed as not being part of their in-group and would kill them on sight, unlike real world Fascists who are at least pragmatic enough to build political movements large enough to take over Governments. Fascists are pretty bad; but they do believe in oligarchical order based on private economic power. People to the right of Fascists might believe only in killing others whenever they get the chance.
J: And third, It seems to me passing strange that the motto of the Musketeers "one for all, and all for one," would be viewed as either radical or as communist. I certainly think Dumas would have been surprised by such a claim.
MF: Interpretations must be made on the basis of the person saying it, not necessarily the person who originated it.
If a libertarian for example said "Given what I believe about private property rights, let people do what they want."
Then that would be far different if a communist said the same thing.
J1: What an extreme relativist you are. Derridian nonsense! Interpretations must be based on what a text says. Your theory is that the meaning of “One for All and All For One,” depends on who says it. But I say the text says what it says, and that interpreters just offer different theories about what it says with the possibility that someone may offer a theory that is true.
In any event, both Dumas and Tom said “One for All and All One” and each of is can offer a theory of its meaning. What I am telling you is that that motto doesn't mean class struggle dictatorship of the proletariat, Democratic centralism, a cure for capitalism or any such nonsense. All it means is that a group of people has decided to stick together and look out for each other at all costs. Here in the United States we call that patriotism, not Communism.
Continuing final reply to KT:
J: Still further, next thing you'll be going on about is that Jesus was a communist too, because he said "Do Unto Others, As You Would Have Them Do Unto You."
MF: Blah blah.
J1: That was certainly a bankrupt answer to a legitimate challenge!
J: This name-calling is getting a little ridiculous. Why don't you killer tomatos leave off the name-calling and stick to the issues?
MF: It isn't name calling. It's ideology identification.
J1: Bull crap! Ideology identification is about textual analysis of what someone says and than comparing the result to ideologies that are already well-known. You've done none of that.
What you've done is to just call us names that you think will discredit us. You're working at the level of children in kindergarten, who've discovered a new dirty word they can use to exile somebody they don't like to an outgroup. You need to do better next time killer tomato!
J: Afraid you'll just get your asses kicked, or will have to grow up past 6th grade?
MF: Bring it on. I'll wipe the floor with you if you want to debate further.
J1: Well, you can certainly try; but if your replies are up to their past standard all you'll do is to reinforce your reputation as a killer tomato!
JK:
"When a bank creates a loan, simultanously deposits are created into the loan recipients account. Are you saying at this point in time, Reserves have now been created?
My understanding was that banks do not lend Reserves…. that at determined period of time, they must seek out Reserves to make sure they are in accordance with the Reserve Ratio."
That's true, but note this part of an exchange http://neweconomicperspectives.org/2012/07/a-communication-from-your-central-bank.html#comment-29804
between Dan and Warren:
"DK: I’m not saying that the CB targets a quantity of reserves. I know the price is the target, not the quantity. I’m just saying that when the quantity of reserves goes up or down, that happens as an automatic response to endogenous changes in the quantity of deposits.
WM: It happens simultaneously as loans create both deposits and reserves (as an overdraft in the first instance) so in that sense banking creates its own reserves, and the fed prices them.
DK: So the causation goes from changes in deposits to changes in reserves, not from changes in reserves to changes in deposits.
WM: right.
DK: If aggregate bank deposits go up and there are no excess reserves, isn’t it fair to say that the CB must supply additional reserves so that banks can make their increased volume of payments without pressuring the FF rate upward?
WM: as above, deposits (as well as check clearing) can create overdrafts which *are* reserves."
JK:
When you spend more money than you have in your account, you become "overdrawn" at your bank. An overdraft is issued automatically to those that have good credit but it is nontheless a LOAN from the bank, which has to be paid back in future.
It is EXACTLY the same thing with banks.
Banks can become overdrawn on their account at the Fed if they run out of the necessary quantity of reserves.
When they become overdrawn, they get an automatic overdraft loan facility from the Fed, because they have REALLY GOOD credit.
But they still have to repay that overdraft and any outstanding interest owed, like normal people
(though of course they get preferential rates and preferential treatment because by definition as member banks they have REALLY GOOD credit - like a quadzillion times better credit than you or I).
Joe Firestone (Letsgetitdone): "In any event, both Dumas and Tom said “One for All and All One” and each of is can offer a theory of its meaning. What I am telling you is that that motto doesn't mean class struggle dictatorship of the proletariat, Democratic centralism, a cure for capitalism or any such nonsense. All it means is that a group of people has decided to stick together and look out for each other at all costs. Here in the United States we call that patriotism, not Communism.
Dumas was talking about the motto of a group of four comrades in arms. I am talking about humanity as a species.
"To the left of communism" means a moral obligation as a human being to treat other members of the species as oneself. ("Do unto others..." "Love your neighbor as yourself") and to treat all life and being as sacred since only One is. ("YHVH elohenu YHVU echad" means "YHVH [the Name=Existence], our God, is one in being, not in number" — Zohar).
BTW, those teachings are not original with Jesus. He was quoting Hebrew scripture and paraphrasing Rabbi Hillel in the Golden Rule, which is found in similar form in all traditions.
Regarding property, Jesus and those who followed him shared a common purse. ("If you would be perfect, sell what you have, give it to the poor and come follow me.") Buddha also. And Shankara, too. Those who think they own anything cannot own everything.
This doesn't require external renunciation but rather internal — being in the world but not of it. It is universally applicable. Emperor Marcus Aurelius and Epictetus the slave were both Stoics that practiced apatheia (equanimity, tranquility), and their writings are virtually indistinguishable although their stations were opposites. This is a teaching of Kirshna in the Bhagavad Gita. It was reiterated in today's terms by Meher Baba.
All wisdom traditions teach these things at their core, which is why the teaching is called perennial wisdom.
What happens when a bank makes loan is that the loan officer approves the request, the contract is signed, and the customer's account is credited in the amount of the loan. The loan is a bank asset and the deposit is a bank liability. It is opposite for the customers.
Then the liquidity management department checks to see if there are reserves to cover in the bank's deposit account at the Fed. If not, then the bank borrows the reserves on the interbank market from another bank that has excess reserves at the overnight rate. If at the end of an period, the bank does not have sufficient reserves, i.e., has an overdraft at the Fed, the Fed credits the bank's reserve acct at the penalty rate. Needless to say, banks do their best to avoid the penalty rate since it is a unnecessary cost to them and it sends a signal to regulators that they are not on top of things.
Tom, the issue from the perspective of Captain Capitalism is that Jesus and Buddha were mainly all about the renunciation of practical day-to-day money-related business.
Captain Capitalism suspects that production and innovation might, in contrast, actually have their origin in the preoccupation with day-to-day money-related business.
So Captain Capitalism is confused.
How to meld the teachings of the sages with the teachings of the pragmatists?
"Love conquers all."
(“Omnia Vincit Amor et nos cedamus amori” meaing, “love conquers all; let us too, yield to love!” — Virgil, Ecologues X, 69
"Truth alone is victorious."
For Ramanan:
satyameva jayate nānṛtaṁ
satyena panthā vitato devayānaḥ |
yenākramantyṛṣayo hyāptakāmā
yatra tat satyasya paramaṁ nidhānam
Truth alone triumphs; not falsehood.
Through truth the divine path is spread out by which
the sages whose desires have been completely fulfilled,
reach where that supreme treasure of Truth resides.
Mundaka Upanishad, 3.1.6
Freedom is found in complete fulfillment.
My last mentor, who was a close disciple of Meher Baba, was vice-president in charge of petroleum purchasing. He was constantly wining and dining the oil barons and was based on Monaco so he easily travel East or West, which often did. His expense account was the largest in company, Standard Oil of California, now Chevron.
He often went on to India to be with Meher Baba at his rather austere ashram there. He noticed that the disciples around Meher Baba and Baba himself lived quite austerely and he thought that perhaps he was in the wrong place. So he asked Meher Baba if he could leave his position and get something simpler, in the US if Baba did not wish his presence in India.
Baba said to him, "Who do you think got you this job?" He said that the immediately flashed in his mind, and he replied, "You, Baba?"
Meher Baba replied, "Yes and you are exactly where you need to be."
There is no obstacle to being anywhere and doing anything as long as one acts honestly and with complete integrity. Best is to develop internal non-attachment and one could be either an emperor or a slave, as Marcus Aurelius and Epictetus go to show.
But non-attachment does not mean becoming inert or rejecting the material aspect of live but rather integrating the spiritual aspect of life and the material aspect of life in wholeness of life. See Meher Baba, Discourses, "The Life of the Spirit".
(BTW, Meher Baba was silent, and so when I say "he said," I mean that he communicated either through an alphabet board or, later in his life, through hand signals that were read out by one of the people he had assigned to this task.)
LetsGetItDone:
The 4 worst bank panics (meaning the extent of the resulting slump of GNP) in US history occurred under the Fed.
Your understanding of history is way off. You keep saying the 19th century was a time of greater slumps, but the empirical facts say otherwise.
Not the way I read it from the history of panics, depressions and recessions. The 18th c. was characterized by recurrent panics, depressions and recessions and a good deal of this was under free banking, as was the 20th c. and now the 21st with a recession in 2000 and a deep recession in 2008 and other very possible in 2013. None of the shifts in monetary and financial arrangements has made a whole lot of difference wrt to these recurrent cycles. This bolsters the MMT argument that the underlying cause is fiscal and visible through the sectoral balance approach.
MF is just ridiculous and just departs increasingly from reality as most people understand it. He can go tell his fairy stories somewhere else.
Tom thanks for your criticism and amplification. It's still plain to me that being to the left of communism isn't Communism, but an elevated form of humanitarianism an unacceptable philosophy to social darwinists like MF.
BTW, I know most of what you said having studied Hillel in school and religious philosophy at various points up to and including Meher Baba, but thought it best just to keep the dialogue to a minimum since there were so many errors of MF's I needed to counter.
MF your historical re-interpretations bank panics followed by depressions are fanciful, comical, and fictional. But, I'm happy to have you keep doubling down on your idiocy, it makes it obvious that your spinning a tale unmoored in reality.
Tom spiritual belief is not the same thing as an economic plan. We've had spirituality and religion since for ever, but we've still had to work out how to organise ourselves so that we can produce all the things we want to use and consume. The quasi-buddhist sci-fi futurama still needs to produce and consume.
Y: " No we have not had spirituality forever other than in fairly limited pockets. We have had religion forever and there is a big difference.
If you don't think that spirituality and economics are the same, read Ohiyea aka Dr Charles Eastman's The Soul of the Indian.
Spirituality is living one's life as a human being rather than as an animal. The economics are really quite different in that mature human beings are not dominated by narrow self-interest. They are systems people intuitively, rather than calculators. This is rarely found in the modern developed world, in which institutional religion is largely competing businesses, and normative religions are means of social control, an "opiate of the people," as Marx said, just as governments and law are legalized theft and coercion that favor the privileged.
See, I told you as I radical and agreed with Major Freedom et al on many fundamental issues regarding which anarchists of the left and right close.
"governments and law are legalized theft and coercion that favor the privileged."
But you don't want to end the legalized theft and coercion just yet? Only once eveyone has become spritual enough to live in peace and share with each other, rather than being obsessed with their own self-interest?
What about the Bob Roddis world of just a few basic laws, no government, and letting everyone just do whatever they want? If they want to be spritual and altruistic then they can be.
Y, as I have repeated, spiritual economics and other things spiritual, i.e., getting the priorities in life correct wrt the system as whole, is not going to happen on a wide scale (or wise scale) until collective conscious has matured more. What the timeframe looks like, I don't know, but a lifetime of studying this leads me to conclude that this is how the evolutionary system is programmed. In the meanwhile there are always groups and networks that strive to live according to this ideal and actualize this vision of what could be.
There are many experiments that have taken place already and are taking place, some more successful than others. Basically the tendency is toward cooperation, reciprocity, coordination and increasing adaptability, as Roger would say, and using sharing, open source, distributed systems and redundancy, social networking, and decentralization. There are a lot of very smart people into this globally.
LetsGetItDone:
MF is just ridiculous and just departs increasingly from reality as most people understand it. He can go tell his fairy stories somewhere else.
Ad hominem fallacy.
Tom thanks for your criticism and amplification. It's still plain to me that being to the left of communism isn't Communism, but an elevated form of humanitarianism an unacceptable philosophy to social darwinists like MF.
"Left of Communism" is just another way of saying "I am a communist but I don't want to be associated with dictators."
MF your historical re-interpretations bank panics followed by depressions are fanciful, comical, and fictional.
They are documented fact.
http://emlab.berkeley.edu/~cromer/JEP_Spring99.pdf
Page 32. Table 5.
The four worst slumps following bank panics were 1920, 1929, 1937, and the current slump.
The Fed was established in 1913.
You're not scientific.
But, I'm happy to have you keep doubling down on your idiocy, it makes it obvious that your spinning a tale unmoored in reality.
Ad hominem fallacy.
LetsGetItDone:
It's typical that communists consider economic science to be "Social Darwinism."
The irony is that it is precisely you people who want to take us back to turning individuals into tribal means to the ends of some "greater good".
MF: The Romer study misses two downturns in the 21st century; the downturn of 2000 and the crash of 2008. In addition, it doesn't cover the latter part of the 18th century nor most of the 19th, when there was no Fed. Also the data for the latter part of the 19th century have more measurement error because the data is estimated using linear regression.
Furthermore, the way she measured recessions doesn't take into account bigger depressions within which recessions occur. We see this during the depression period itself. She has 1929, 1937 and 1939. The first was the beginning of the Great Depression. But the second and the third occurred within the Great Depression which had never ended.
There's much more difficulty in the 19th century, most of the period before the Fed. The major panics of 1837 and 1873 aren't considered, and the recessions between these major events aren't in her data either. In addition her measures of severity have to do with the the time from peak to trough and the time from trough to peak as measured by GNP and industrial production movements. These of course have nothing directly to do with with the growth or decline of economic inequality and the level and persistence of unemployment, both of which are more important measures of the severity of downturns from the viewpoint of working and middle class people.
Historical accounts say that the crashes of 1837 and 1873 were followed by very deep depressions and much suffering, and also that there were frequent and severe business cycles all through the 19th century. In short, I don't think the Romer study is relevant to my claims, both because it doesn't fully cover the relevant periods and also because its measures are typical neo-liberal empirical constructs that so not speak to the human costs of economic downturns. As for my not being "scientific," if by that you mean that I ignore data RELEVANT to my interpretations then that is not true. What I don't do however, is to bring data to bear that has little or nothing to do with the claims I'm making.
Btw, in your latest replies you charge me with making ad hominem remarks about your views. I certainly have done that. However, you have no right to complain about that since you began the practice by claiming they certain people were "socialists" or "communists" and that certain policies were "socialism" or "communism," when these labels had little or nothing to do with what people were arguing. So, when you stop the labeling, name-calling and ad hominems, I will too. Otherwise, since i don't believe in unilateral disarmament, I'll use ad hominems too.
MF: you accuse me of calling economic "science" "social darwinism." Well first, I don't do that I call particular social philosophies and ideologies derived from false economic theories "social darwinism." Also, what kind of economic science is it that can't predict its way out of a paper bag, and that, in particular, failed to predict the most significant economic event since the Great Depression?
Also, "left of communism" isn't just another way of saying I'm a communist who doesn't believe in dictatorship. As Tom showed in his reply, his ideology has little if anything to do with Marxism or Marxism-Leninism or Maoism, or any other historical examples we have of what we call "communism." So, once again, this is just another example of your attacking someone's views by using name-calling and ad hominem.
Letsgetitdone:
You're kind of falling a bit into the typical libertarian trap. They define the terms of the argument according to their beliefs and then push you to argue your position within their terms.
Given that you're into MMT, why bother defending the actions of the Fed or the banking system?
About half of MMT is about criticising pretty much everything they do.
You have to realise people like Major Freedom have a deep hatred for anything which deviates from their fundamentalist beliefs.
This is why they refer to those with different views to theirs as "cockroaches".
They're sick individuals. And to make it even worse they're sanctimonious and self-righteous with it.
$$$$$$$$$$:
Fuck off Major Freedom.
You seem mad. You a hater against anyone who deviates from your fundamentalist beliefs?
Letsgetitdone:
MF: The Romer study misses two downturns in the 21st century; the downturn of 2000 and the crash of 2008.
Cool, two more downturns under central banking.
In addition, it doesn't cover the latter part of the 18th century nor most of the 19th, when there was no Fed.
The latter part of the 18th century was under the First Bank of the United States, America's first experiment with central banking.
Yes, there was no Fed, but there was central banking at that time.
There was a panic of 1819, the first major panic in US history. But that was after the state printed money to finance the war of 1812. In the ashes of that business cycle, the Second Bank of the United States was chartered. Then it too was abolished. Then the Civil War, more money printing, and another panic.
There is a pattern here.
Also the data for the latter part of the 19th century have more measurement error because the data is estimated using linear regression.
Even with reasonable error and confidence intervals, they were no match for the slumps post 1913.
Furthermore, the way she measured recessions doesn't take into account bigger depressions within which recessions occur. We see this during the depression period itself. She has 1929, 1937 and 1939. The first was the beginning of the Great Depression. But the second and the third occurred within the Great Depression which had never ended.
Romer looked at the extent of slumps following bank panics. Of course within a period of a decade or more, with multiple bank panics, there would be multiple measured slumps.
There's much more difficulty in the 19th century, most of the period before the Fed. The major panics of 1837 and 1873 aren't considered, and the recessions between these major events aren't in her data either.
The panic of 1837 followed 20 years of the country under a central bank, the Second Bank of the United States. The panic of 1873 resulted from a March 1865 Civil War law of the banking system which placed a prohibitive 10% tax on all bank notes, which had the desired effect of virtually outlawing all note issues by the state banks. From 1865 on, the national banks had a legal monopoly on the issue of bank notes. The bank acts of 1863 and 1864 created a pyramid system of credit at the state banks backed by the legal tender of the national banks.
Historical accounts say that the crashes of 1837 and 1873 were followed by very deep depressions and much suffering, and also that there were frequent and severe business cycles all through the 19th century.
How deep? How much suffering?
In short, I don't think the Romer study is relevant to my claims, both because it doesn't fully cover the relevant periods and also because its measures are typical neo-liberal empirical constructs that so not speak to the human costs of economic downturns.
So your bias prevents you from accepting the data.
As for my not being "scientific," if by that you mean that I ignore data RELEVANT to my interpretations then that is not true. What I don't do however, is to bring data to bear that has little or nothing to do with the claims I'm making.
But I am the one making claims about the extent of slumps following bank panics, and that Romer has shown the 4 worst occurred under central banking.
If you have superior data, from which you are making your claims, then it wouldn't be too much to ask for you to post this alleged data?
LetsGetItDone:
Btw, in your latest replies you charge me with making ad hominem remarks about your views. I certainly have done that. However, you have no right to complain about that since you began the practice by claiming they certain people were "socialists" or "communists" and that certain policies were "socialism" or "communism," when these labels had little or nothing to do with what people were arguing.
I disagree. Those "labels" did have to do with what you guys are arguing. Socialism is by definition government ownership and/or control over the means of production. Communism is government ownership and control, and fascism is government control with nominally private steward owners.
Arguing against a free market in money, arguing in favor of state monopoly control of money production, is socialism by definition. This is not ad hominem, because I didn't use these identifications as arguments AGAINST your arguments. I ADDED those identifications along with my arguments.
So yes, I can "complain" of your ad hominem attacks.
So, when you stop the labeling, name-calling and ad hominems, I will too.
I have a hard time believing you, because you engaged in ad hominem prior to me doing it.
Calling MMTers advocates of socialism to the extent of money production, is not ad hominem.
Letsgetitdone:
MF: you accuse me of calling economic "science" "social darwinism." Well first, I don't do that I call particular social philosophies and ideologies derived from false economic theories "social darwinism."
What "false" economic theories? Any I made here?
Also, what kind of economic science is it that can't predict its way out of a paper bag, and that, in particular, failed to predict the most significant economic event since the Great Depression?
Who says economic science has to predict future human learning and future human choices based on that learning? What if I told you that trying to predict future paths of knowledge, of what we learn, where we learn it, how we learn it, is a foolhardy endeavor that belongs with astrology and religion?
LetsGetItDone:
Also, "left of communism" isn't just another way of saying I'm a communist who doesn't believe in dictatorship. As Tom showed in his reply, his ideology has little if anything to do with Marxism or Marxism-Leninism or Maoism, or any other historical examples we have of what we call "communism."
Right, communism without the dictators.
His ideology has very much to do with Marxism. Hickey wants money production to be centralized in the hands of the state (that's plank 5 of the Communist Manifesto). He wants progressive income taxes. That's plank 2. He wants free state controlled education for all children. That's plank 10.
So, once again, this is just another example of your attacking someone's views by using name-calling and ad hominem.
YOU HAVE NOT SHOWN THAT.
Letsgetitdone:
You're kind of falling a bit into the typical libertarian trap. They define the terms of the argument according to their beliefs and then push you to argue your position within their terms.
Yes, logic sucks.
Given that you're into MMT, why bother defending the actions of the Fed or the banking system?
About half of MMT is about criticising pretty much everything they do.
....except their existence.
$$$$$$$$$$$$$$$$$$:
You have to realise people like Major Freedom
Straw man, spoiling the well.
have a deep hatred for anything which deviates from their fundamentalist beliefs.
YOU hate anything that deviates from your fundamentalist beliefs!
They're sick individuals.
Sick people call for violence against innocent people. You call for state violence against innocent people. Therefore you are sick.
This is why they refer to those with different views to theirs as "cockroaches".
It's why you told me to "F off".
I call cockroaches those like you who gleefully call for violence against innocent people, solely because you can't stand people making more than you, and living a more prosperous life than you. You want some people to violently control everyone else, and then call it "democracy."
And to make it even worse they're sanctimonious and self-righteous with it.
Look in the mirror.
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